Economic downturn shakes Americans' trust

Economic Downturn Shakes Americans' Trust

Published: Jan. 29, 2009 at 11:14 PM

CHICAGO, Jan. 29 (UPI) -- Two U.S. researchers say they were shocked at how deeply the economic downturn has affected the trust of the average American.

Paola Sapienza of the Kellogg School of Management at Northwestern University and Luigi Zingales of the University of Chicago Booth School of Business have created the Chicago Booth/Kellogg School Financial Trust Index.

"Trust is a powerful motivator of economic behavior," said Sapienza in a statement. "Our previous research and anecdotal evidence suggest that lack of trust can have paralyzing effects on financing and investments."

"One of the key factors undermining trust," said Zingales, "is the perception that the rules have changed in the middle of the game."

The researchers found 22 percent trust the stock market, 11 percent withdrew money from the bank and kept it in cash during the crisis, and while the majority of respondents favor government intervention in financial markets, 80 percent said the way it intervened has made them less confident in the market.

Even among the respondents who felt that federal intervention in the financial sector should increase, 75 percent still lost confidence as a result of recent federal intervention, the researchers said.

The telephone survey of U.S. adults was conducted by Social Science Research Solutions during two weeks starting Dec. 17. The survey is at: www.financialtrustindex.org.