Working Paper
Trust in institutions and the profile of inequality

This paper investigates the importance of accounting for the profile of inequality in the analysis of institutional trust. Drawing on individual data from 82 countries around the world over the 1981–2021 period, it sheds light on the potential limitations of exploring the impact of the income distribution’s shape on trust, using—as is traditional in the literature—a single inequality indicator.

Results suggest that total income inequality and institutional trust are positively associated but this aggregated result hides some troubling countervailing effects. In fact, when the whole profile of inequality is considered, institutional trust appears to be significantly and negatively related to inequality between different income groups in society—namely, between the poor, the middle class, and the rich—whereas it is positively associated with inequality within those income groups.

Although some heterogeneities in these findings can be detected according to the country’s level of development as well as according to personal characteristics related to political views, the profile of inequality does always matter. Thus, this paper indicates that limiting the analysis to one single inequality aggregator would only capture an average effect and hide a more complex underlying nexus between income distribution and institutional trust.