top of page
  • Ofer Setty

Trust is a resource. In Denmark, they even know how to use it to reduce prices

In the weeks leading up to winter, the Danes hold yard sales where you can find clothes, toys, tools and more. One of the most prominent features of their yard sales can teach us a lot.

On the weekends, my family and I wander around the neighborhoods in Copenhagen, taking advantage of the time before the winter arrives. During this time of year, there are a lot of yard sales where you can find clothes, toys, and even tools -- but what’s missing is the sellers. Instead, there’s a sign with prices and a phone number that you can use to pay via an app. From an Israeli perspective, the level of trust that exists in Denmark seems unlikely and unsustainable and is accompanied by thoughts like: “what if…” and “how would they know if…” but, in fact, this is what it’s like here.

Trust and money go hand in hand, because it’s another resource that enables us to do things. Kenneth Arrow, one of the top economists of all time and one of the first to win a Nobel Prize (1972), claimed that almost every commercial transaction includes some element of trust and that a significant portion of economic differences across countries can be explained by the level of mutual trust. For example, there are many self-service checkout kiosks in the supermarkets here (increased trust), which allows employing fewer employees and reduce prices for the consumer (more money saved).

In many countries, including Israel, trust as an important resource has been gradually replaced in recent decades with incentives – getting people to do the right thing using the carrot-and-stick approach (i.e., rewards and punishments). For example, people may work long hours because of the overtime pay they receive and not because they truly care, or they do what they are am supposed to do to avoid getting fired. Theoretically, if people have the correct incentives, then who cares about trust? In fact, government offices employ a lot of people thinking about matters of the economy through the perspective of incentives, efficiency, and productivity. These are all undoubtedly important matters, but who are the ones focusing on more trust?

Trust is a central concept not only in regard to interpersonal communication, but also in regard to communication between residents and the state. For example, residents’ level of trust in the system led to radically different behaviors in Israel and Denmark in response to the COVID-19 pandemic. The same virus, the same panic, but one key difference: The Danes believed that the government’s decisions were in their interest and therefore followed the guidelines, thereby allowing the government to implement reasonable guidelines, keep the economy relatively open, and allow people to maintain a fairly normal routine.

Trust is important not only in times of crisis, but also in daily routine. A prime example of this can be seen in attitudes toward taxation. It’s well known that Scandinavian countries have high taxes. In Israel, it always seems to me that for every shekel of tax that Israeli residents pay, they are unsatisfied with say 70% of where that money goes, whether it relates to the occupied territories, security, the ultra-Orthodox, culture, social security, the public sector, other people’s pensions, etc. Accept what you’re happy to pay for and shed a tear for the rest of the money that you’ve paid. In Denmark, on the other hand, people feel that most of their tax money is put toward reasonable purposes.

Referring back to interpersonal communication, trust affects not only your finances but also your everyday feeling. When someone is speeding, one of two things can be assumed. One is that the person is a jerk and the other is that he is truly in a hurry due to some unexpected emergency. Our response to an event (both physical and emotional) is highly dependent on the way we think about the event. The fact that in Israel people typically assume the first scenario, whereas here in Denmark it’s often the second one, is yet another expression of trust. This subjective feeling is also reflected in numbers. The organization, “Our World in Data,” conducted a survey across many countries and asked respondents, “Would you say that most people can be trusted?” In the Scandinavian countries, 60-70% of people answered positively. In Israel, the corresponding figure was 23%.

Denmark is not ideal. Every country has its own problems and it’s not a competition. What’s more, the population here is relatively homogenous, which gives them an excellent starting point in terms of social cohesion. However, this comparison between Israel and Demark, can teach us a number of lessons that we can use to try to make our circumstances more favorable. This then leads us to the question of how to build trust. Similar to the climate crisis, there’s a question about who should lead the change. It’s tempting to say, let’s all do our best, but unfortunately that usually doesn’t work.

This leaves us with the authorities. The jumping off point should be that every decision made should be one that puts the citizen first – not the economy, not productivity, not employment, not the hi-tech industry, and not even security matters – just the citizen, plain and simple. This may sound obvious, but a scan of the rhetoric of politicians, economic leaders, and opinion leaders paints a completely different picture. If we can at least identify a model worth emulating, then maybe something among us will also start to change, as we gradually identify and implement the components that work for us.

bottom of page