Particularized and generalized trust: The indirect relationship of trust on economic development

This research claims that a solid theory to explain and predict the wellbeing of economies has to include critical factors from political science, economics, and as well as political psychology. Previous researches discussed and explored the significance of including those factors, but they fell short by misconception in the definition of trust. This research revisits those claims by splitting trust into two distinct variables, Particularized and Generalized Trust. Generalized Trust carried the measurement available for all past work on trust, while for the first time this research was able to successfully provide a unique measurement for Particularized Trust extracted from the Fifth Wave of the World Values Survey. Moreover, the theory in this research is supported by Anatol Rapoport's tit for tat strategy in the iterated prisoner's dilemma, where the highest possible outcome is achievable through political, economical, and psychological perceptions governed by a set of regulations. Empirical results tested the claims in two levels, individual and national, and found consistencies on the relationship between Particularized Trust and Institutions. An increase in Particularized Trust does influence a positive change in Institutions at both levels, where Particularized Trust provides the foundations upon which formal institutions are built. The national level analysis investigated mediation analysis claims and found considerable support that Particularized Trust influences economic prosperity through formal institutions. Furthermore, the relationship between Particularized Trust and Institutions held positive and significant despite the level of analysis and inclusion of numerous controls. Therefore, an increase in Particularized Trust does lead to an increase in GDP per capita, where trust in people you know or know something about proved to be more important to the economy than trusting people in general.