Groups, growth and trust: Cross-country evidence on the Olson and Putnam hypotheses

Olson (1982) and Putnam (1993) provide sharply conflicting perspectives on the impact of private associations on economic well-being and social conflict. Olson (1982) emphasized their propensity to act as special interest groups that lobby for preferential policies, imposing disproportionate costs on the rest of society. Putnam (1993) viewed memberships in horizontal associations as a source of generalized trust and social ties conducive to governmental efficiency and economic performance. Using cross-country data, this paper investigates the impact of associational memberships on generalized trust and economic performance, finding little support for Olson's view of the impact of groups, and only mixed support for the Putnam perspective.