Abstract

http://ssrn.com/abstract=330339
 
 

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Do Trust and Trustworthiness Pay Off?


Joel B. Slemrod


The Stephen M. Ross School of Business at the University of Michigan; National Bureau of Economic Research (NBER)

Peter Katuscak


Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

September 2002

NBER Working Paper No. w9200

Abstract:     
Are individuals who trust others better off than those who do not? Do trustworthy people prosper more than untrustworthy ones? We first pose these questions in a search model where individuals face repeated choices between trusting (initiating an investment transaction) and not trusting, and between being trustworthy (not stealing the investment) and cheating. We then derive predictions for the relationship between observed individual behavior, aggregate attitudes, and individual prosperity. Finally, we evaluate these predictions empirically using household-level data for eighteen (mostly developed) countries from the World Values Survey. We find that, on average, a trusting attitude has a positive impact on income, while trustworthiness has a negative impact on income. In addition, we find evidence of complementarity between these two attitudes and the aggregate levels of the complementary attitudes. Most strikingly, the payoff to being trustworthy depends positively on the aggregate amount of trust in a given country.

Number of Pages in PDF File: 59

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Date posted: September 12, 2002  

Suggested Citation

Slemrod, Joel B. and Katuscak, Peter, Do Trust and Trustworthiness Pay Off? (September 2002). NBER Working Paper No. w9200. Available at SSRN: http://ssrn.com/abstract=330339

Contact Information

Joel B. Slemrod (Contact Author)
The Stephen M. Ross School of Business at the University of Michigan ( email )
701 Tappan Street
Room A2120
Ann Arbor, MI 48109-1234
United States
734-936-3914 (Phone)
734-763-4032 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Peter Katuscak
Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )
P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic
HOME PAGE: http://www.cerge-ei.cz
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