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Title:Trust, confidence and economic growth: An evaluation of the Beugelsdijk Hypothesis PDF Logo
Authors:Volland, Benjamin
Issue Date:2010
Series/Report no.:Jena economic research papers 2010,080
Abstract:This paper analyses the hypothesis that the robust relationship between trust - as measured by the World Values Survey's question 'In general, do you think that most people can be trusted, or that you can't be too careful in dealing with people?' - and economic growth, established by empirical macroeconomic growth literature (Knack & Keefer, 1997; Zak & Knack, 2001; Beugelsdijk, de Groot, & van Schaik, 2004; Dearmon & Grier, 2009) in fact captures the well-functioning of institutions. Our results reveal that the correlation between trust and economic growth is robust in terms of statistical significance and sign of the estimated coefficient, when controling for the respondents' perceived well-functioning of institutions. While underlining the existing empirical evidence that trust matters in explaining differences in economic performance, our results also show that this influence is largely independent of institutional well-functioning.
Subjects:trust
institutions
economic growth
JEL:B40
O11
Z13
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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