Valuation of Trust in Government: The Wellbeing Valuation Approach

Subjective wellbeing maximization is a possible goal of government or public policies, and it is often considered the goal of individual life. This paper proposes an estimation using the Wellbeing Valuation Approach (WVA) to estimate the monetized effect of trust in government. Using a cross-country panel data set for 97 countries in the period from 2011 to 2019, we arrive at three main findings. First, there is a positive relationship between trust in national government and average life satisfaction. Second, trust in the national government has a global median value of Intl$ 5649 per person a year in foregone income. Third, trust affects life satisfaction directly as well as indirectly through per capita GDP. This indirect effect is considered relatively small compared to the direct effect, being approximately six times smaller. This study contributes to the policy evaluation literature by providing an evaluation of trust in government to be used as a proxy to plan future investment or policy assessment.

Automated summary

This study utilizes the Wellbeing Valuation Approach to estimate the monetized effect of trust in government, finding a positive relationship between trust in national government and average life satisfaction. The global median value of trust in the national government is estimated to be Intl$5649 per person a year in foregone income. Trust affects life satisfaction directly and indirectly through per capita GDP, with the indirect effect being approximately six times smaller than the direct effect.