Cultures of Trustworthiness: The Role of the Regulator

Regulators usually focus on things that are visible, formal and quantifiable rather than blurry, informal and qualitative. Clear rules and formal targets are utterly necessary to the healthy functioning of complex societies. But they are not sufficient. When trust and trustworthiness evanesce, formal rules are at best fragile and inadequate and, at worst, actively pernicious.

Here are the things that regulators need to know about trust. First —that trust can’t be reduced to crude economic incentives. When we trust others, it is because we think that they have internalized our interests— at least in part. Second — that trust isn’t completely divorced from incentives either. Our trustworthiness, to some people on some questions, is circumscribed by our selfish interests. Third — that trust and trustworthiness can’t easily be engineered. They depend more on broad cultural expectations than on specific formal rules. Finally —that trust and trustworthiness are nonetheless crucial.