Does Economic Prosperity Breed Trust?

Mark Gradstein and Alberto Chong
Authors registered in the RePEc Author Service: Markus Brueckner

No 10749, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We explore whether national economic prosperity enhances mutual generalized trust. This is done using panel data of multiple waves of the World Values Surveys, whereby national income levels are instrumented for using exogenous oil price shocks. We find significant and substantial effects of national income on the level of trust in the economy. In particular, a one percent increase in national income tends to cause an average increase of one percentage point (or more) in the likelihood that a person becomes trustful. One possible rationalization for this, exhibited in a simple model, is that perceived prosperity signals that many people are trustworthy.

Keywords: Generalized trust; National income; Oil price shocks (search for similar items in EconPapers)
JEL-codes: O10 P17 (search for similar items in EconPapers)
Date: 2015-08
New Economics Papers: this item is included in nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Working Paper: DOES ECONOMIC PROSPERITY BREED TRUST? (2015)
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