Social Capital and the Quality of Government: Evidence from the U.S. States

Social capital” -in the form of generalized trust and strong civic norms prescribing cooperation in large-scale collective action settings -can improve governmental performance in three major ways. First, it can broaden governmental accountability, so that government must be responsive to citizens at large rather than to narrow interests. Second, it can facilitate agreement where political preferences are polarized. Third, it is associated with greater innovation in policymaking in the face of new challenges. Consistent with these arguments, Putnam (1993) has shown that regional governments in the more-trusting, more civic-minded northern and central parts of Italy provide public services more effectively than do those in the less-trusting, less civic southern regions. Using cross-country data, La Porta et al. (1997) and Knack and Keefer (1997) obtained findings consistent with Putnam’s evidence. For samples of about 30 nations represented in the World Value Surveys, they found that higher-trust societies tended to have significantly better performing governments, using survey measures of citizen confidence in government as well as subjective indicators of bureaucratic efficiency. This study further analyzes links between social capital and governmental performance using data for the U.S. states. In states with more social capital--as measured by an index of trust, volunteering and census response--governmental performance is rated more highly, using ratings constructed by the Government Performance Project. This result is highly robust to (1) inclusion of a variety of control variables, (2) consideration of the possibility of influential outlying values, (3) treating the performance ratings as ordinal rather than cardinal, and (4) corrections for possible endogeneity. Stephen Knack* The World Bank *1818 H Street NW, Washington, DC 20433. E-mail: [email protected]. The author thanks Robert Putnam and Meg Haist for generously providing data, and Laura Langbein for helpful comments. The conclusions of this paper are not intended to represent the views of the World Bank, its Executive Directors, or the countries they represent.