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Title: Does Economic Prosperity Breed Trust?

Author(s): Markus Brueckner, Alberto Chong and Mark Gradstein

Publication Date: August 2015

Keyword(s): generalized trust, national income and oil price shocks

Programme Area(s): Macroeconomics and Growth

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.

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Bibliographic Reference

Brueckner, M, Chong, A and Gradstein, M. 2015. 'Does Economic Prosperity Breed Trust?'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10749