Working Paper: CEPR ID: DP17115
Authors: Sule Alan; Elif Kubilay
Abstract: We provide causal evidence on how impersonal trust and reciprocity create prosperity and shape its distribution. For this, we leverage a large-scale randomized educational intervention that boosts trust and reciprocity in children. We show that in a world where individuals trust anonymous others, prosperity grows but so does inequality. While impersonal trust unambiguously creates wealth, redistribution is needed to tame the inequality it brings. Our results suggest that harnessing prosocial psychology through educational actions may pave the way for a prosperous and just society. However, for these actions to ultimately achieve this end, they should be pervasive and universally accessible.
Keywords: impersonal trust; prosperity; inequality; education
JEL Codes: C93; D63; I24
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| educational intervention (I24) | impersonal trust (D14) |
| educational intervention (I24) | reciprocity (Z13) |
| impersonal trust (D14) | wealth generation (E25) |
| reciprocity (Z13) | wealth generation (E25) |
| impersonal trust (D14) | economic interactions (F69) |
| wealth generation (E25) | inequality (D63) |
| impersonal trust (D14) | economic behavior in trust games (C72) |
| reciprocity (Z13) | economic behavior in trust games (C72) |