National income and trust

We explore whether national economic prosperity enhances mutual generalized trust. This is done using a 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 natio...

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Bibliographic Details
Published in:Review of development economics 2021-02, Vol.25 (1), p.293-314
Main Authors: Brückner, Markus, Chong, Alberto, Gradstein, Mark
Format: Article
Language:English
Subjects:
Corruption
Crime
National income
oil price shocks
Panel data
Petroleum
trust
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Summary:We explore whether national economic prosperity enhances mutual generalized trust. This is done using a 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 1% increase in national income tends to cause an average increase of 1 percentage point (or more) in the likelihood that a person becomes trustful. We also identify crime and corruption as potential mechanisms that may lead to the reported causal effect and explore heterogeneous effects across individuals.
ISSN:1363-6669
1467-9361
DOI:10.1111/rode.12724