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 inReview of development economics Vol. 25; no. 1; pp. 293 - 314
Main Authors Brückner, Markus, Chong, Alberto, Gradstein, Mark
Format Journal Article
LanguageEnglish
Published Oxford Blackwell Publishing Ltd 01.02.2021
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