The Puzzle of the Scandinavian Welfare State and Social Trust

Abstract

The Scandinavian welfare model is a puzzle to economists: It works economically, even though free-riding should prevail with its explosive cocktail of high taxation and high social benefits. One possible solution to the puzzle could be the unique stock of social trust present in Scandinavia. Here, the four Scandinavian countries (Norway, Denmark, Sweden, and Finland) form the top three with scores above 60 percent social trust on a ranking that covers 94 countries from all over the world.