How Can Trust Be Measured? an Alternative Approach Using Retailers’ Refund Policies
Abstract: What is trust and how can we measure it? Social scientists widely accept as an intuitive truth that trust impacts positively on the economic success of societies. By now there is a large empirical literature studying and quantitatively assessing such a relationship. Yet, there is no consensus on how trust can be properly measured. In this paper, I survey the literature and present an alternative to the common approaches on measuring trust. Traditionally, trust has been identified by relying on surveys—directly asking people if, and how much, they trust their fellow countrymen—and/or on experiments—creating a perfectly controlled environment where the role of trust can be properly isolated and identified. Both approaches have important limitations: the former is prone to misidentification, while the latter is limited by scale issues. I argue that it is possible to capture trust-levels in a real-world context by locating proxies: refund policies implicitly account for the level of trust that retailers posit in their customers and represent a tacit measure of their client’s overall trustworthiness. By constructing an index of refund policies of stores that sell a similar set of homogenous goods across different regions/countries, we can get a reliable estimate of trust-differences across these regions/countries. I use Ikea as a study case of how such a proxy can be built.
