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Does Economic Prosperity Breed Trust?

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  • 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
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    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.

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    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

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