IDEAS home Printed from https://ideas.repec.org/p/cpr/ceprdp/10749.html
   My bibliography  Save this paper

Does Economic Prosperity Breed Trust?

Author

Listed:
  • Gradstein, Mark
  • Chong, Alberto

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.

Suggested Citation

  • Gradstein, Mark & Chong, Alberto, 2015. "Does Economic Prosperity Breed Trust?," CEPR Discussion Papers 10749, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:10749
    as

    Download full text from publisher

    File URL: https://cepr.org/publications/DP10749
    Download Restriction: CEPR Discussion Papers are free to download for our researchers, subscribers and members. If you fall into one of these categories but have trouble downloading our papers, please contact us at subscribers@cepr.org
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Markus Brückner & Antonio Ciccone & Andrea Tesei, 2012. "Oil Price Shocks, Income, and Democracy," The Review of Economics and Statistics, MIT Press, vol. 94(2), pages 389-399, May.
    2. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2008. "Alfred Marshall Lecture Social Capital as Good Culture," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 295-320, 04-05.
    3. Stephen Knack & Philip Keefer, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(4), pages 1251-1288.
    4. Maxim Ananiev & Sergei Guriev, 2014. "The Effect of Income on Trust: the Evidence from 2009 Crisis in Russia," SciencePo Working papers Main hal-03429914, HAL.
    5. Bjrnskov, Christian, 2009. "Social trust and the growth of schooling," Economics of Education Review, Elsevier, vol. 28(2), pages 249-257, April.
    6. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2007. "Social Capital as Good Culture," NBER Working Papers 13712, National Bureau of Economic Research, Inc.
    7. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, April.
    8. Oguzhan Dincer & Eric Uslaner, 2010. "Trust and growth," Public Choice, Springer, vol. 142(1), pages 59-67, January.
    9. Christian Bjørnskov & Gert Svendsen, 2013. "Does social trust determine the size of the welfare state? Evidence using historical identification," Public Choice, Springer, vol. 157(1), pages 269-286, October.
    10. Sascha O. Becker & Katrin Boeckh & Christa Hainz & Ludger Woessmann, 2016. "The Empire Is Dead, Long Live the Empire! Long‐Run Persistence of Trust and Corruption in the Bureaucracy," Economic Journal, Royal Economic Society, vol. 126(590), pages 40-74, February.
    11. Bjørnskov, Christian, 2006. "The Determinants of Trust," Ratio Working Papers 86, The Ratio Institute.
    12. repec:hal:spmain:info:hdl:2441/18morovaof8fdbvqtbkas8cvhm is not listed on IDEAS
    13. repec:hal:wpspec:info:hdl:2441/18morovaof8fdbvqtbkas8cvhm is not listed on IDEAS
    14. Algan, Yann & Cahuc, Pierre, 2014. "Trust, Growth, and Well-Being: New Evidence and Policy Implications," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 2, pages 49-120, Elsevier.
    15. Yann Algan & Pierre Cahuc, 2013. "Trust and Growth," Annual Review of Economics, Annual Reviews, vol. 5(1), pages 521-549, May.
    16. Christian Bjørnskov, 2010. "How does social trust lead to better governance? An attempt to separate electoral and bureaucratic mechanisms," Public Choice, Springer, vol. 144(1), pages 323-346, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Markus Brückner & Alberto Chong & Mark Gradstein, 2021. "National income and trust," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 293-314, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Corrado Giulietti & Enrico Rettore & Sara Tonini, 2023. "The chips are down: the influence of family on children’s trust formation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(1), pages 211-233, January.
    2. Fuchs-Schündeln, N. & Hassan, T.A., 2016. "Natural Experiments in Macroeconomics," Handbook of Macroeconomics, in: J. B. Taylor & Harald Uhlig (ed.), Handbook of Macroeconomics, edition 1, volume 2, chapter 0, pages 923-1012, Elsevier.
    3. Gur, Nurullah & Bjørnskov, Christian, 2017. "Trust and delegation: Theory and evidence," Journal of Comparative Economics, Elsevier, vol. 45(3), pages 644-657.
    4. Markus Brückner & Alberto Chong & Mark Gradstein, 2021. "National income and trust," Review of Development Economics, Wiley Blackwell, vol. 25(1), pages 293-314, February.
    5. Christian Bjørnskov & Pierre-Guillaume Méon, 2012. "Trust as the missing root of institutions, education, and development," Working Papers CEB 12-031, ULB -- Universite Libre de Bruxelles.
    6. Christian Bjørnskov & Pierre-Guillaume Méon, 2013. "Is trust the missing root of institutions, education, and development?," Post-Print CEB, ULB -- Universite Libre de Bruxelles, vol. 157(3-4), pages 641-669, December.
    7. John F. Helliwell & Shun Wang & Jinwen Xu, 2016. "How Durable are Social Norms? Immigrant Trust and Generosity in 132 Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(1), pages 201-219, August.
    8. Christian Bjørnskov & Pierre-Guillaume Méon, 2015. "The productivity of trust," Post-Print CEB, ULB -- Universite Libre de Bruxelles, June.
    9. Karaja, Elira & Rubin, Jared, 2022. "Θ The cultural transmission of trust norms: Evidence from a lab in the field on a natural experiment," Journal of Comparative Economics, Elsevier, vol. 50(1), pages 1-19.
    10. Nikolova, Milena & Popova, Olga & Otrachshenko, Vladimir, 2022. "Stalin and the origins of mistrust," Journal of Public Economics, Elsevier, vol. 208(C).
    11. Oasis Kodila-Tedika & Julius Agbor, 2016. "Does Trust Matter for Entrepreneurship: Evidence from a Cross-Section of Countries," Economies, MDPI, vol. 4(1), pages 1-17, March.
    12. Karl McShane, 2017. "Getting Used to Diversity? Immigration and Trust in Sweden," Economics Bulletin, AccessEcon, vol. 37(3), pages 1895-1910.
    13. Alessandro, Martin & Cardinale Lagomarsino, Bruno & Scartascini, Carlos & Streb, Jorge & Torrealday, Jerónimo, 2021. "Transparency and Trust in Government. Evidence from a Survey Experiment," World Development, Elsevier, vol. 138(C).
    14. Melissa Dell & Nathan Lane & Pablo Querubin, 2018. "The Historical State, Local Collective Action, and Economic Development in Vietnam," Econometrica, Econometric Society, vol. 86(6), pages 2083-2121, November.
    15. Di Liberto, Adriana & Sideri, Marco, 2015. "Past dominations, current institutions and the Italian regional economic performance," European Journal of Political Economy, Elsevier, vol. 38(C), pages 12-41.
    16. Méon, Pierre-Guillaume & Sekkat, Khalid, 2015. "The formal and informal institutional framework of capital accumulation," Journal of Comparative Economics, Elsevier, vol. 43(3), pages 754-771.
    17. Hans Pitlik & Ludek Kouba, 2014. "Does Social Distrust Always Lead to a Stronger Support for Government Intervention? WWWforEurope Policy Paper No. 8," WIFO Studies, WIFO, number 47113.
    18. Sangnier, Marc, 2013. "Does trust favor macroeconomic stability?," Journal of Comparative Economics, Elsevier, vol. 41(3), pages 653-668.
    19. Andreas Lichter & Max Löffler & Sebastian Siegloch, 2021. "The Long-Term Costs of Government Surveillance: Insights from Stasi Spying in East Germany," Journal of the European Economic Association, European Economic Association, vol. 19(2), pages 741-789.
    20. Chaudhary, Latika & Rubin, Jared & Iyer, Sriya & Shrivastava, Anand, 2020. "Culture and colonial legacy: Evidence from public goods games," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 107-129.

    More about this item

    Keywords

    Generalized trust; National income; Oil price shocks;
    All these keywords.

    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P17 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Performance and Prospects

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cpr:ceprdp:10749. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.cepr.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.