Slemrod, Joel, and Peter Katuščák. 2005. “Do Trust and Trustworthiness Pay Off?” Journal of Human Resources 40(3): 621-646.

Are individuals who trust others better off than those who do not? Do trustworthy people prosper more than untrustworthy ones? We formulate and, using data from the World Values Survey, empirically evaluate predictions about the relationship between an individual’s income and his self-reported attitudes toward trust and trustworthiness, and predictions about how these relationships are mediated by the average level of trust and trustworthiness in the country. On average, exhibiting trust has a positive, while exhibiting trustworthiness has a negative impact on income. More strikingly, the payoff to being trustworthy increases with the average level of trust in a given country.

Joel Slemrod is the Paul W. McCracken professor of business economics and public policy and a professor of economics at the University of Michigan. Peter Katuščák is an assistant professor at the Center for Economic Research and Graduate Education at Charles University in Prague, Czech Republic, a research fellow at the Economic Institute of the Academy of Sciences of the Czech Republic, and a lecturer in economics at the University of California in San Diego. The authors would like to thank members of the University of Michigan Public Finance workshop, and particularly John Bound and Matthew Shapiro, for helpful comments on an earlier version of this paper. They are also indebted to three anonymous referees for providing useful suggestions for improvement of the paper. The authors take responsibility for all remaining errors. The data used in this article can be obtained beginning October 2005 through September 2008 from Peter Katuščák by emailing Peter.Katuscak@cerge-ei.cz.