Trust, Confidence and Economic Growth An Evaluation of the Beugelsdijk Hypothesis

Benjamin Volland

No 2010-080, Jena Economics Research Papers from Friedrich-Schiller-University Jena

Abstract: This paper analyses the hypothesis that the robust relationship between trust - as measured by the World Values Survey's question "In general, do you think that most people can be trusted, or that you can't be too careful in dealing with people?" - and economic growth, established by empirical macroeconomic growth literature (Knack & Keefer, 1997; Zak & Knack, 2001; Beugelsdijk, de Groot, & van Schaik, 2004; Dearmon & Grier, 2009) in fact captures the well-functioning of institutions. Our results reveal that the correlation between trust and economic growth is robust in terms of statistical significance and sign of the estimated coefficient, when controling for the respondents' perceived well-functioning of institutions. While underlining the existing empirical evidence that trust matters in explaining differences in economic performance, our results also show that this influence is largely independent of institutional well-functioning.

Keywords: Trust; Institutions; Economic growth (search for similar items in EconPapers)
JEL-codes: B40 O11 Z13 (search for similar items in EconPapers)
Date: 2010-11-15
New Economics Papers: this item is included in nep-fdg, nep-neu and nep-soc
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:jrp:jrpwrp:2010-080

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