This chapter illustrates the weakening of the social contract in the region, and aims to better understand its intricacies and the policy challenges and areas that are crucial for its strengthening. First, it presents evidence that suggests the growing disconnection between citizens and public institutions in Latin America and the Caribbean (LAC), which in turn is a sign of a weaker contract. This section argues that two factors could explain this growing disconnection: the rising aspirations of a middle class that has significantly expanded in the last decade, and the difficulties of public institutions to respond to new socio-economic challenges and guarantee greater well-being. The strength of the social contract is also assessed by exploring tax morale – i.e. the willingness to pay taxes – in the region. Second, it looks at how well-being has diminished recently in LAC, and suggests the need to rethink institutions to provide better opportunities and public goods and services and respond to citizens’ evolving demands, thus improving their well-being.