Background

Ghana is bedeviled with the lack of 24-h supply of electricity. This holds back economic growth and sustainable development prospects. Several studies have investigated varied factors that account for household’s willingness-to-pay (WTP) for improved electricity services. However, not much is known about the role of trust as a proxy for social capital and household’s WTP for improved electricity services. We hypothesize that trust (social capital) is a key factor in determining households WTP for a 24-h supply of electricity in Ghana, a service which is largely controlled by the government.

Methods

This study uses primary data collected in a survey of households and applies the well-known and widely used Contingent Valuation Method (CVM) to estimate how much households who trust and those who do not trust in the government are willing to pay for a 24-h supply of electricity.

Results

We have evidence that trust in the government is statistically significant and varies negatively with WTP for improved electricity supply. In line with our hypothesis and the few existing studies on trust-WTP relationship, we conclude that trust plays a key role in determining WTP for improved electricity services in Ghana. Our estimates which are downward biased constitute 15–17% of household’s income.