Groups,Growth and Trust: Cross-Country Evidence on the Olson and Putnam Hypotheses

Olson (1982) and Putnam (1993) providesharply conflicting perspectives on theimpact of private associations on economicwell-being and social conflict. Olson(1982) emphasized their propensity to actas special interest groups that lobby forpreferential policies, imposingdisproportionate costs on the rest ofsociety. Putnam (1993) viewed membershipsin horizontal associations as a source ofgeneralized trust and social ties conduciveto governmental efficiency and economicperformance. Using cross-country data,this paper investigates the impact ofassociational memberships on generalizedtrust and economic performance, findinglittle support for Olson's view of theimpact of groups, and only mixed supportfor the Putnam perspective.