With the Economy Recovered from the 2008 Financial Crisis, Chicago Booth/Kellogg School Financial Trust Index Shows Trust Restored

• Financial trust increased from 22 percent in 2008 to 28 percent at the end of 2018, according to a survey marking the 10-year anniversary of the financial crisis.

Efraim Benmelech, Paola Sapienza, and Luigi Zingales¹

CHICAGO (April 17, 2020)—With the decline in the number of daily Covid-19-related deaths, the desire to move to a Phase 2 in the policy response to the Coronavirus is growing. In the absence of a readily-available vaccine or a winning cocktail of antiviral drugs, the chances of a Phase 2 are entirely dependent upon a combination of testing and tracking. Both testing and tracking face serious technical challenges. Yet, even if these challenges are overcome, the success of any combination of the two depend upon widespread compliance, which cannot be obtained simply through police enforcement. How can we achieve a willing compliance? A special wave of the University of Chicago Booth School of Business and Northwestern University’s Kellogg School of Management Financial Trust survey finds that the government has a lot of work to do.

The survey, conducted between Monday and Saturday last week on a representative sample of 1,000 Americans, contains both good and bad news regarding Americans’ willingness to comply. The good news is that Americans have bought into social distancing rules: 79% declare they wear a mask when they buy groceries; 60% were not in close physical contact with more than 2 people outside of their housemates; and 63% said that they either worked from home or they stayed home for other reasons.

The bad news is that most Americans are unwilling to give up their privacy to allow a digital form of tracking, the only form with any chance to work. Asked whether they would approve of the Government using a mobile phone app to track the movement of everyone in the country to reduce the spread of infection if this reduces the length of the stay-home requirement by two weeks, only 34% responds positively. Raising the benefit to a reduction of two months in the length of the stay-home requirement, only an extra 11% agree. Thus, 54% of the people are unwilling to be tracked by the government even if this results in two additional months of lockdown. Interestingly, this response came in spite of the fact that only 6% stated that individual freedom is more important than protecting people at risk from coronavirus.

Thus, Americans are not against taking measures to reduce the spread of the virus such as social distancing or wearing masks but they particularly dislike the form of intervention that appears to be most effective. Why? One big reason is that they do not trust their government: only 30% of the respondents trust the US federal government and those people are much more likely to accept to be tracked.

If the government wants to move to the Phase 2, it needs to do a lot of convincing. First of all, it needs to convince people that it will not abuse of this power. As there is a due process to authorize a wiretapping and a rigid process to handle the information acquired through it, the government should create a similar process for tracking information obtained via phone apps. If it does not overcome this lack of trust, there is not hope.

Most importantly, the government has to tell Americans the truth: we have already lost the privacy we are longing to protect. We lost it when we blindly signed all the terms of use that Facebook, Google, Apple, and many other digital platforms have put in front of us. We are already tracked, listened to, spied in every instant of our lives to allow digital ads to target us more accurately. Why shouldn’t we want to be tracked to save lives and the economy?

Only if the government is willing to explain how little privacy we have left would the American people accept the Faustian pact in front of us: tracking for a faster (partial) reopening of the economy. The consequences would be good for the economy in general, but potentially devastating for an entire industry that has profited from silence on the level of digital surveillance already existing in this country. Would the President and the US government be willing to be candid about the loss of privacy already experienced by American citizens to save the economy?

In the supplement to the 27th wave survey, respondents also answered questions on their trust in media outlets and various professions, their attitudes toward the North American Free Trade Agreement (NAFTA), and their attitudes toward the tariffs imposed on China.

For professions, trust level was: doctors (65 percent), high school teachers (55 percent), college professors (49 percent), economists (29 percent), journalists (28 percent), lawyers (19 percent), and politicians (5 percent). Regarding attitudes toward free trade: 43 percent of respondents think NAFTA has been good for the United States, and 43 percent of respondents think imposing tariffs on China is bad for the United States.

ABOUT THE SURVEY: The Financial Trust Index captures the level of trust that Americans have in institutions. The study was conducted for the Financial Trust Index via telephone by SSRS, an independent research company. Interviews were conducted on April 6th, 2020 – April 12th, 2020 among US adults. A total of 980 interviews were conducted, with a margin of error for total respondents of +/-3.43% at the 95% confidence level. The study was conducted for the Financial Trust Index via telephone by SSRS, an independent research company. More information about SSRS can be obtained by visiting www.ssrs.com.