We tax polluters. Why not tax spreaders of misinformation?

Trust is the glue that holds society together and makes cooperation possible. But research shows that Americans’ faith in institutions and in each other has cratered in recent decades, driven in part by the rampant spread of misinformation and partisan division.

In economic terms, this growing mistrust is a social tax that makes everything we do more costly, from business transactions and elections to interactions with colleagues and neighbors. It creates additional friction in every encounter with a stranger, forces us to second-guess the information we see online, and demands more of our time and effort to navigate an increasingly uncertain world.

As a professor at USC Marshall School of Business who has spent over two decades studying trust, I believe we can start repairing trust by approaching it as we have other large societal problems — by adjusting the economic incentives for spreading mistrust and misinformation. Those who sow mistrust rarely pay the costs, but we can change that.

A 2023 Gallup poll of Americans’ confidence in 15 different institutions found that 11 were at or near their all-time low, with Congress and big business at the bottom of the list. Partisanship and misinformation have also wrecked our trust in media. We’re even losing faith in one another. A 2019 Pew Research poll found that two-thirds of Americans believe our trust in each other is shrinking and half say people are not as reliable as they used to be.

This decline in trust has real consequences for society’s ability to function smoothly. Only 59 percent of Americans believe President Joe Biden won the last election “fair and square,” making it harder for him to govern effectively. Researchers have also found that a lack of trust harms economic prosperity. A review of 19 studies revealed that, on average, a 10-percentage point increase in the share of people who trust those around them could lift a country’s GDP by 0.5 percentage points.

We need to change the incentives for those who contribute to the “social tax” of mistrust. While we all play a role in either nurturing or eroding trust, a small number of actors spew out far more than their share of the problem. For instance, a 2021 study found that the majority of Covid-19 misinformation and conspiracy theories originated with just 12 popular online influencers.

Media outlets, social media platforms, politicians and public figures fueling mistrust profit from the clicks and attention they get, while we all pay the cost. Economists call this a “negative externality” and suggest that the best way to address it is to make those causing the problem bear its costs.

For example, a factory might save money by dumping runoff into the local lake and leaving the community to face the consequences. But taxes, fines and regulations can hold polluters responsible for the costs of polluting, instead of passing them off to the public.

There are many ways we can change economic incentives to restore trust. We should reduce opportunities to profit from actions that create mistrust and division — if social media platforms changed their algorithms to stop promoting accounts that spread falsehoods, they would reduce the ability to make money off mistrust. We should also provide more information to the public about who is fueling mistrust, and groups like AllSides and Newsguard rate the reliability and bias of prominent media outlets.

On a broader scale, we could even create a nonpartisan, independent trust rating agency that evaluates the trustworthiness of key actors in our information ecosystem, such as media outlets, social media platforms, businesses, political campaigns and online influencers. While this idea may sound far-fetched, comparable systems already have public acceptance. Credit rating agencies evaluate people’s financial trustworthiness, the Federal Trade Commission monitors truthfulness in advertising and juries collectively determine legal truth.

But, of course, any group that ranks trustworthiness must itself be trusted. It would need to be as unbiased, evidence-based and authoritative as possible; represent different views across the political spectrum; and allow each side to make, defend and appeal its case.

Lastly, we should hold those profiting off misinformation responsible for the costs of the mistrust they help create. Last year, Fox News settled a lawsuit by Dominion Voting Systems for $788 million related to false claims the network made about fraud in the 2020 presidential election. Similar suits have been settled against Alex Jones for promoting conspiracy theories about the Sandy Hook school shooting and Rudy Giuliani over false claims of election fraud.

While these lawsuits hold the peddlers of mistrust accountable, legal action is both costly and slow. A bolder approach might be to levy a fine on those who promote misinformation, as determined by regulations or an independent trust rating agency like the one I described above. Like taxing polluters, fines would force those profiting off misinformation to pay some portion of their earnings back to the public to cover the social costs, while also making it less tempting to reoffend.

We need to view mistrust through an economic lens and address the real social and financial costs it creates. Certain media companies, social media platforms and public figures are making huge profits while polluting our society with mistrust. AI companies may be next to join the list, as they release untested tools that are widely known to provide false information (so-called “hallucinations”). We should start holding these actors responsible for the negative externalities they create.

In a complex world full of big challenges, we desperately need to cooperate. But we are headed in the opposite direction. All of us are paying a higher trust tax in our daily interactions and in the friction mistrust creates within our institutions. It’s time for those fueling mistrust to start bearing some of the cost.

Peter Kim is a professor of management and organization at USC Marshall School of Business and the author of “How Trust Works: The Science of How Relationships Are Built, Broken, and Repaired” (2023).