Abstract
ABSTRACT We show that variation in trust is crucial to explain variation in patience. The unconditional correlation between trust and patience is 0.190 across 76 countries based on the outcomes of a survey among 80,000 individuals. Controlling for variations in country-level early agricultural development by means of heteroskedastic linear maximum likelihood regression resolves the data’s heteroscedasticity and raises the correlation to 0.345. Two-stage least squares estimation, with Genetic Distance – a descriptor of within country homogeneity – as its most valuable exogenous instrumental variable, removes endogeneity bias from the empirical relationship, and results in a robust final correlation of 0.754. Our study underlines the importance of proper econometric analysis as a prerequisite to accurately measure the extent of the relationship between patience and trust, two cultural variables that are seen as important determinants of economic development.
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