4 Channels through which Governance and Social Norms Impact on Well-being (continued)
| Channel | Mechanism | Evidence |
|---|---|---|
|
Direct routes |
||
|
1 Through facilitating greater participation in all spheres, meeting human needs for sociability, recognition and identity |
Norms of fairness, reciprocity and individual responsibility reduce barriers to inter-personal relations, by reducing transaction costs and enhancing generalized trust |
Knack and Keefer (1997) |
| 2 Through protecting important political, civil and individual freedoms that are themselves constitutive of well-being | Constitutional conventions guide the legitimate use of coercive power by governments, and constrain the abuse of power (as suggested by Palmer, 1993) | Ostrom (2000) |
| 3 Through promoting physical safety and security and reducing conflict | Norms of non-violence, fairness and respect for the rights and interests of minors and other vulnerable groups reduce the incidence of violence and exploitation in the community, and reduce the extent of conflict | |
|
Indirect routes |
||
|
4 Through higher economic output |
Social divisions, in terms of ethnicity and income, and corrupt public institutions, result in an inability to generate social consensus, reducing the ability to adjust to economic shocks |
Rodrik (1999 and 2000)Easterly (1999 and 2000) |
| Trust and shared values reduce transaction costs in the private sector; and may encourage investment | Knack and Keefer (1997) La Porta et al (1996) Guiso et al (2000) | |
| The norm of reciprocity facilitates the production of local public goods and the management of common pool resources | Ostrom (2000) | |
| The norm of fairness reduces the room for conflict, and helps settle conflict when it does occur, thus reducing transaction costs and increasing economic growth | Experimental evidence on the existence of a norm of fairness and its effects on individual behaviour (cited in Gorringe, 1995) | |
| Trust and shared values increase state effectiveness through voluntary compliance with laws, taxes and regulations | La Porta et al (1997) | |
| 5 Through higher non-economic output | Norms of fairness and reciprocity facilitate a higher level of output by civil society organisations | |
| Virtuous and vicious circles | ||
|
6 Interactions between trust and the effectiveness of institutions |
Trust enhances the effectiveness of institutions, which in turn builds further trust |
La Porta et al (1997) |
| 7 Interactions between shared values and economic growth | Social cohesion may contribute to higher economic output (as above); and economic growth may in turn contribute to social cohesion by changing individual’s subjective feelings about the degree of well-being they derive from belonging to their society (as suggested by Gorringe, 1995, and Bates, 1996) | |
| 8 Interactions between civil strife and quality of governance | In the presence of two or three large competing ethnic groups, weak governments are associated with civil strife | Collier and Hoeffler (1998) |
| Low level equilibrium trap | ||
| 9 Lack of trust can be very difficult to break down | A lack of generalized inter-personal trust is associated with lack of social and economic interactions. In the absence of such interactions, it is difficult to revise one’s view of the trustworthiness of others. In a low trust society it is rational to exploit others rather than to trust them | Putnam (1993) |
