Abstract: Trustworthiness is the basis for maximizing output in economic exchange and in explaining differences in standards of living around the world. A society's willingness to trust and the quality of its institutions have their origins in the trustworthiness of its citizens. We propose a theoretical structure where trustworthiness and trust are important for production, but trustworthiness is primary. We estimate the relationship using a sample of 51 countries. We find that trustworthiness is important for output per capita and that the effect of trust is likely to come from trustworthiness via institutions. Our results are robust to alternative specifications.

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