Is Trust a Driver of Patience? A Cross – Country Analysis

Abstract

This paper finds that a one standard deviation increase in the variation of Trust leads to an increase of 10 percent of variation in Patience. This result is based on survey responses among 80,000 individuals across a wide range of different countries. Heterogeneity and endogeneity bias initially lead to correlational insignificance and under-estimation. We explain how unbiased estimation of this behavioral effect can be obtained by means of inventive search for controls and instrumental variables, and with appropriate econometric analysis of the collected data. The policy implication of our results is that generating and maintaining a trustful national environment is fundamental to encourage patience and other economy enhancing behavior.