Does Economic Prosperity Breed Trust?

36 Pages Posted: 11 Oct 2015

See all articles by Markus Brüeckner

Markus Brüeckner

University of Queensland

Alberto Chong

Andrew Young School of Policy Studies, Department of Economics; Institute for Corruption Studies

Mark Gradstein

Ben-Gurion University of the Negev - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute); Centre for Economic Policy Research (CEPR); World Bank - Development Research Group (DECRG)

Date Written: October 1, 2015

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

Suggested Citation

Brueckner, Markus and Chong, Alberto and Gradstein, Mark, Does Economic Prosperity Breed Trust? (October 1, 2015). Andrew Young School of Policy Studies Research Paper Series No. 15-08, Available at SSRN: https://ssrn.com/abstract=2671930 or http://dx.doi.org/10.2139/ssrn.2671930

Markus Brueckner

University of Queensland ( email )

St Lucia
Brisbane, Queensland 4072
Australia

Alberto Chong (Contact Author)

Andrew Young School of Policy Studies, Department of Economics ( email )

P.O. Box 3992
Atlanta, GA 30302-3992
United States

Institute for Corruption Studies

Stevenson Hall 425
Normal, IL 61790-4200
United States

Mark Gradstein

Ben-Gurion University of the Negev - Department of Economics ( email )

Beer-Sheva 84105
Israel
+97 2 8647 2288 (Phone)
+97 2 8647 2941 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

Centre for Economic Policy Research (CEPR)

London
United Kingdom

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

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