When institutions earn trust: Evidence from new survey data

This paper investigates how the quality of formal institutions shapes citizens’ political trust. We combine a newly collected nationally representative survey of 10,000 Italian citizens with two independent measures of local institutional performance (MAQI and IQI). To address endogeneity concerns, we employ an instrumental variable strategy using historical predictors of current institutional development. This approach builds on the idea that current differences in institutional quality across regions have been shaped by different political histories. This identification strategy allows us to identify the causal effect of institutional quality on trust while mitigating endogeneity concerns. We document a striking hierarchical divergence. At the regional level, higher institutional quality significantly strengthens political trust. Conversely, aggregate municipal quality shows no causal effect on trust. However, disaggregating the index into its components reveals countervailing forces: while citizens reward economic performance, we identify a “paradox of political leadership” where highly qualified, elite political profiles are associated with lower trust. These findings suggest that while administrative effectiveness fosters legitimacy, perceived distance between the elite and the electorate can erode it.