The growth of government, trust in government, and evidence on their coevolution

  • Steven GordonEmail author
  • John Garen
  • J. R. Clark


The coevolution of trust in government alongside the growth of government is an aspect of research on the latter topic that has not been explored. We consider this coevolution in the context of a political economy model and a public interest view of government growth and incorporate the role of trust in government. The negative association of the growth in government with trust in government is consistent with a political economy model of government growth, rent seeking/lobbying, trust, and productivity. Though such a model is broadly consistent with the historical data since the late 1950s, we present a more econometrically sophisticated examination of the data. In particular, we recognize the difficulties of statistical inference with non-stationary data and take the appropriate steps to deal with it. There is evidence that two aspects of government size – transfer payments and regulatory activity – align with the political economy model. Specifically, we find cointegration indicating the following: a negative association between trust and lobbying activity, a negative relationship between trust and each of these two measures of government, and a positive association of trust and productivity. However, other measures of government size do not produce as robust of findings. Also, we do not find evidence of positive associations of trust and government size nor of trust and lobbying, as might be expected from a public interest view of government.


H1 H3 H5 H6 

JEL Classification

H10 H11 H3 H41 H50 H60 



For comments and suggestions, we thank Joshua Hall, Dwight Lee, Ana Herrera, James Fackler, Amihai Glazer session participants at the Southern Economic Association meetings, the Association of Private Enterprise Education conference, and the Public Choice Society meetings, and the anonymous referees. For support, we thank the Probasco Chair of Free Enterprise at The University of Tennessee at Chattanooga, the Schnatter Institute for the Study of Free Enterprise, and the BB&T Program for the Study of Capitalism, both of the latter two at the University of Kentucky.


  1. Abadir, Karim M., Hadri, Kaddour, and Tzavalis, Elias, The influence of VAR dimensions on estimator biases. Econometrica, 67(1), January 1999, pp. 163–181Google Scholar
  2. Alesina A, Warcziarg R (2000) The economics of civic trust. In: Pharr SJ, Putnam RD (eds) Disaffected Democracies: What’s Troubling the Trilateral Countries, Princeton. Princeton University Press, NJGoogle Scholar
  3. Baumol, W.J., The microeconomics of unbalanced growth: the anatomy of urban crisis. Am Econ Rev, 57 (3), June 1967, pp. 415–426Google Scholar
  4. Becker, G. S., A theory of competition among pressure groups for political influence. Q J Econ, 98 (3), August 1983, pp. 371–400Google Scholar
  5. Blendon, Robert, John Benson, Richard Marin, Drew Altman, Mollyann Brodie, Mario Brossard, and Matt James. 1997. Changing attitudes in America. In Why people Don't Trust government, eds. Joseph S. Nye Jr., Philip D. Zelikow, and David C. King, 205–216. Cambridge, MA: Harvard University PressGoogle Scholar
  6. Blind PK (2006) Building Trust in Government in the twenty-first century: review of literature and emerging issues. UNDESA, NovemberGoogle Scholar
  7. Borcherding, Thomas and Lee, Dong, (2004) The Growth of the Relative Size of Government, in Charles Rowley and Friedrich Schneider (eds.), The encyclopedia of public choice, Kluwer Academic Publisher, New York pp. 597–602Google Scholar
  8. Brennan, G. and Buchanan, J.M., Towards a tax constitution for leviathan. J Public Econ, 8, December 1977, pp. 255–274Google Scholar
  9. Dalton, Russell, (2004) Democratic Challenges, Democratic choices: the Erosion of political support in advanced industrial democracies, Oxford, UK: Oxford University PressGoogle Scholar
  10. Dawson JW, Seater JJ (2013) Federal regulation and aggregate economic growth. J Econ Growth 18(2):137–177CrossRefGoogle Scholar
  11. Demsetz, H., (1982) The Growth of Government, in deVries Lectures, no.4. Economic, Legal and Political Dimensions of Competition. Amsterdam: North-HollandGoogle Scholar
  12. Fehr, Ernst and Gachter, Simon, Fairness and retaliation: The economics of reciprocity. J Econ Perspect, 14(3), Summer 2000Google Scholar
  13. Ferris, J.S. and West, E.G., Changes in the real size of Government: US experience 1948–1989 Carleton Economic Papers 93–0, Department of Economics, Carleton University, 1993Google Scholar
  14. Ferris, J.S. and West, E.G., The cost disease versus leviathan explanations of rising government cost. Public Choice, 98, March 1999, pp. 307–316Google Scholar
  15. Fukuyama, Francis, Social capital and civil society, IMF working paper, April 2000Google Scholar
  16. Garen, John and Clark, J.R., Trust and the growth of Government. Cato J, 35(3), Fall 2015, pp. 549–580Google Scholar
  17. Gemmell, N., Wagner’s law, relative prices and the size of the public sector. Manch Sch, 57, September 1990, pp. 361–377Google Scholar
  18. Gramlich, E.M., (1985) Excessive Government Spending in the U.S.: Facts and Theories, in E.M Gramlich and B.C. Ysander (eds.), Control of Local Government, Stockholm: Almqvist and Wiksell International, pp. 29–73Google Scholar
  19. Hakkio CS, Rush M (1991) Cointegration: how short is the long run? J Int Money Financ 10(4):571–581CrossRefGoogle Scholar
  20. Hayashi N, Ostrom E, Walker J, Yamagishi T (1999) Reciprocity, trust, and the sense of control: a cross-societal study. Ration Soc 11(1):27–46CrossRefGoogle Scholar
  21. Henrekson, M., (1990) An Economic Analysis of Swedish Government Expenditure, Ph.D. Thesis, Gothenburg UniversityGoogle Scholar
  22. Henrich J, Boyd R, Bowles S, Camerer C, Fehr E, Gintis H, McElreath R (2001) In search of Homo Economicus: behavioral experiments in 15 small-scale societies. Am Econ Rev 91(2):73–78CrossRefGoogle Scholar
  23. Hetherington, Marc, (2005) Why trust matters: declining political trust and the demise of American liberalism, Princeton, NJ: Princeton University PressGoogle Scholar
  24. Holsey CM, Borcherding TE (1997) Why does Government’s share of National Income Grow? An assessment of the recent literature on the U.S. experience. In: Mueller DC (ed) Perspectives on public choice: a handbook. Cambridge University, New York, pp 562–589Google Scholar
  25. Hunter, James D. and Carl D. Bowman. 1996. The State of Disunion: 1996 Survey of American Political Culture Vol. 1. Summary Report. Charlottesville, VA: the post-modernity project, University of VirginiaGoogle Scholar
  26. Husted T, Kenny L (1997) The effect of the expansion of the voting franchise on the size of government. J Polit Econ 105:54–82CrossRefGoogle Scholar
  27. Johansen S (November 1991) Estimation and hypothesis testing of Cointegration vectors in Gaussian vector autoregressive models. Econometrica 59(6):1551–1580CrossRefGoogle Scholar
  28. Kau, James and Rubin, Paul, The growth of government: sources and limits. Public Choice, 113 (3/4), December 2002, pp. 389–402Google Scholar
  29. Knack S, Keefer P (1997) Does social capital have an economic payoff? A cross-country analysis. Q J Econ 112(4):1251–1288CrossRefGoogle Scholar
  30. Levi, Margaret, Tyler, Tom, and Sacks, Audrey, (2008) The Reasons for Compliance With Law, Paper for Workshop on the Rule of Law, Yale University, March 2008Google Scholar
  31. Lewis, M. (2010) Beware of Greeks bearing bonds. Vanity Fair (October),
  32. Lott T, Kenny L (1998) How dramatically did Women’s suffrage change the size and scope of government? J Polit Econ 107:1163–1198CrossRefGoogle Scholar
  33. Lybeck, J.A. and Henrekson, M., (1988) Explaining the growth of government, Amsterdam: Elsevier Science Publishers, 1988Google Scholar
  34. Meltzer AH, Richard SF (1983) Tests of a rational theory of the size of government. Public Choice 41(3):403–418CrossRefGoogle Scholar
  35. Mueller, D. C. (2004). Public choice: an introduction. In The Encyclopedia of Public Choice, pp. 32–48. SpringerGoogle Scholar
  36. Nadler, Janice, (2005) Flouting the Law, Texas Law Review, 83: 1399, 2005Google Scholar
  37. Niskanen, W.A., (1971) Bureaucracy and representative government. Chicago: Aldine-AthertonGoogle Scholar
  38. Nye JS Jr, Zelikow PD, King DC (eds) (1997) Why people Don't Trust government. Harvard University Press, Cambridge, MAGoogle Scholar
  39. Peltzman, S., (1980) The Growth of Government, J Law Econ, 27(2), October 1980, pp. 209–287Google Scholar
  40. Perkins, G.M., The demand for local public goods: elasticities of demand for own price, cross price and income. Natl Tax J, 30, December 1977, pp. 411–422Google Scholar
  41. Perron P (1989) The Great crash, the oil price shock, and the unit root hypothesis. Econometrica 57(6):1361Google Scholar
  42. Pew Research Center for the People & the Press. 2010. The people and their government: distrust, discontent, anger and partisan rancor. Washington, D.C.,
  43. Pharr SJ (2000) Officials’ misconduct and public distrust: Japan and the trilateral democracies. In: Pharr SJ, Putnam RD (eds) Disaffected Democracies: What’s Troubling the Trilateral Countries, Princeton. Princeton University Press, NJGoogle Scholar
  44. Ram, R., Wagner’s hypothesis in time-series and cross-section perspectives: evidence from ‘real data’ for 115 countries. Rev Econ Stat, 69, May 1987, pp. 194–204Google Scholar
  45. Sobel, Russell S and Thomas A. Garrett On the measurement of rent seeking and its social opportunity cost. Public Choice, 112(1–2), July 2002, pp. 115–136Google Scholar
  46. Spann RM (1977) Rates of productivity change and the growth of state and local governments. In: Borcherding TE (ed) Budgets and bureaucrats: the sources of government growth. Duke University Press, Durham, pp 102–129Google Scholar
  47. Stigler, G.J., Director’s law of public income distribution. J Law Econ, 13(1), April 1970, pp. 1–10Google Scholar
  48. Tarabar D, Hall J (2015) The seventeenth amendment, senate ideology, and the growth of government: an empirical note. Appl Econ Lett 22(8):637–640CrossRefGoogle Scholar
  49. Wagner, A, (1893) Grundlegung der Politshen Oekonomie, Leipzig, 3rd editionGoogle Scholar
  50. Warren, Mark E. (ed.), (1999) Democracy and Trust, Cambridge, UK: Cambridge University PressGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.Department of Economics, Gatton College of Business and EconomicsUniversity of KentuckyLexingtonUSA
  2. 2.The University of Tennessee at ChattanoogaChattanoogaUSA

Personalised recommendations