Working Paper: CEPR ID: DP10749
Authors: Markus Brueckner; Alberto Chong; Mark Gradstein
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
JEL Codes: O10; P17
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| National Income (P44) | Trust (G21) |
| Oil Price Shocks (Q43) | National Income (P44) |
| Oil Price Shocks (Q43) | Trust (G21) |