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National income and trust
Author(s) -
Brückner Markus,
Chong Alberto,
Gradstein Mark
Publication year - 2021
Publication title -
review of development economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.531
H-Index - 50
eISSN - 1467-9361
pISSN - 1363-6669
DOI - 10.1111/rode.12724
Subject(s) - prosperity , measures of national income and output , economics , language change , demographic economics , net national income , oil price , econometrics , public economics , monetary economics , macroeconomics , economic growth , gross income , state income tax , art , literature , tax reform
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.