The Importance of Trust during COVID-19

Abstract

It is well established that trust benefits societies in numerous ways, contributing to cooperation, economic growth, and higher quality of institutions. What is less known is the role of trust in crises, where societies face entirely new circumstances. Using the pandemic of COVID-19 as a base, this paper aims to determine if trust was important during this crisis. Specifically, it compares the performance of high- and low-trust OECD countries on economic and health-related outcomes. Using a simple difference-in-differences type of approach, we explore the development of two indicators of economic performance. Furthermore, we assess the performance of three health-related outcomes by running mean comparison tests. The results indicate that higher trust improved outcomes for most indicators of economic and health-related performance, relative to low-trust countries during COVID-19. However, higher trust was associated with higher unemployment rate increases during the pandemic. Moreover, countries with high interpersonal trust did not seem to be better off in terms of GDP per capita levels. These results suggest that trust may have been important for the economy and welfare during COVID-19. Still, we identify two key limitations to this study, including measurement issues of trust and confounding variables. Nonetheless, this study contributes with valuable insights for policymakers, indicating that more attention should be placed on trust-enhancing efforts to increase resilience in future similar events.