Trust and the Distribution of Caution

Trust is often considered a determinant of economic performance. The exogeneity of trust, however, is questionable. We develop a model with heterogeneous agents to determine aggregate trustworthiness, trust, and output. People differ according to their risk aversion (caution). The distribution of risk aversion across individuals -- along with the threat of punishment -- is critical in the process by which trust is formed. The mean and variance of the distribution of caution have direct and indirect effects on trust. For the mean, the direct effect of caution is intuitive: societies with more cautious populations would have less trust. The indirect effect, however works through the perception of trustworthiness and leads to more trust. The net effect is, paradoxically, positive in homogenous societies. In heterogeneous societies, the reverse is true. Trust and output are endogenous, and not monotonically related across countries with different moments of the distribution of caution.trust; trustworthiness; risk aversion; caution; output

Respect, responsibility, and production

We examine the impact of the values respect for others and responsibility on productivity and the accumulation of physical and human capital for a sample of 58 countries. We find that these two core values are important and that their impact is substantial. Respect for others works primarily through productivity whereas responsibility is important to investment in physical and human capital. We also show that respect and responsibility are embedded in institutions and may overcome the negative macroeconomic effects associated with fractionalized societies.values; respect for others; responsibility; institutions; productivity; human capital; output per worker

Respect, responsibility, and production

We examine the impact of the values respect for others and responsibility on productivity and the accumulation of physical and human capital for a sample of 58 countries. We find that these two core values are important and that their impact is substantial. Respect for others works primarily through productivity whereas responsibility is important to investment in physical and human capital. We also show that respect and responsibility are embedded in institutions and may overcome the negative macroeconomic effects associated with fractionalized societies

Trustworthiness and economic performance

Intrinsically trustworthy agents never cheat. A society's willingness to trust and the quality of its institutions have their origins in the intrinsic trustworthiness of its citizens. Trustworthiness is the basis for maximizing output in economic exchange and in explaining differences in standards of living around the world. We measure intrinsic trustworthiness with a question from the World Values Survey and estimate its effect using a sample of 60 countries. We find that trustworthiness is important for output per capita and that the effect of trust is likely to come from trustworthiness

Trust and the Distribution of Caution

Trust is often considered a determinant of economic performance. The exogeneity of trust, however, is questionable. We develop a model with heterogeneous agents to determine aggregate trustworthiness, trust, and output. People differ according to their risk aversion (caution). The distribution of risk aversion across individuals -- along with the threat of punishment -- is critical in the process by which trust is formed. The mean and variance of the distribution of caution have direct and indirect effects on trust. For the mean, the direct effect of caution is intuitive: societies with more cautious populations would have less trust. The indirect effect, however works through the perception of trustworthiness and leads to more trust. The net effect is, paradoxically, positive in homogenous societies. In heterogeneous societies, the reverse is true. Trust and output are endogenous, and not monotonically related across countries with different moments of the distribution of caution

Trustworthiness and economic performance

Intrinsically trustworthy agents never cheat. A society's willingness to trust and the quality of its institutions have their origins in the intrinsic trustworthiness of its citizens. Trustworthiness is the basis for maximizing output in economic exchange and in explaining differences in standards of living around the world. We measure intrinsic trustworthiness with a question from the World Values Survey and estimate its effect using a sample of 60 countries. We find that trustworthiness is important for output per capita and that the effect of trust is likely to come from trustworthiness

Trustworthiness and economic performance

Intrinsically trustworthy agents never cheat. A society's willingness to trust and the quality of its institutions have their origins in the intrinsic trustworthiness of its citizens. Trustworthiness is the basis for maximizing output in economic exchange and in explaining differences in standards of living around the world. We measure intrinsic trustworthiness with a question from the World Values Survey and estimate its effect using a sample of 60 countries. We find that trustworthiness is important for output per capita and that the effect of trust is likely to come from trustworthiness.trustworthiness; trust; institutions; output per capita