Journal article

Effect of Income on Trust: Evidence from the 2009 Economic Crisis in Russia

Maxim Ananyev, Sergei Guriev

The Economic Journal | Oxford University Press (OUP) | Published : 2019

Abstract

This article draws on a natural experiment to identify the relationship between income and trust. We use a unique panel data set on Russia where GDP experienced an 8% drop in 2009. The effect of the crisis had been uneven among Russian regions because of their differences in industrial structure inherited from the Soviet period. After instrumenting average regional income by Soviet industrial structure, we find that 10% decrease in income is associated with a five percentage point decrease in social trust. We also find that post-crisis economic recovery did not fully restore pre-crisis trust level.

Grants

Awarded by Ministry of Education and Science of the Russian Federation


Funding Acknowledgements

We thank Yann Algan, Claudia Senik, Paul Dower, Sergei Izmalkov, Vasily Korovkin, Natalia Lamberova, Alexander Libman, Paasha Mahdavi, Tatiana Mikhailova, Elias Papaioannou, Maria Petrova, Michael Poyker, Thomas Piketty, Anton Sobolev, Daniel Treisman, Alexei Zakharov, Ekaterina Zhuravskaya and seminar participants at UCLA, Frankfurt, Paris School of Economics, ECARES, Princeton, Sciences Po, Tilburg, New Economic School, EBRD, THEMA, London Business School and conference participants at ISNIE Florence for helpful comments. We are grateful to the Public Opinion Foundation (Fond Obschestvennoe Mnenie), especially to Aleksey Churikov, Alexander Oslon and Elena Petrenko for sharing survey data and excellent insights. We thank the Institute of Industrial and Market Studies at Higher School of Economics, Moscow, in particular Guzel Garifullina and Andrei Yakovlev, for sharing survey data. We thank Nikita Melnikov and Dmitry Roudchenko for excellent research assistance. We gratefully acknowledge the support of the Center for the Study of Diversity and Social Interactions at the New Economic School and the Ministry of Education and Science of the Russian Federation, Grant No. 14. U04.31.0002. Views presented are those of the authors and not necessarily of the EBRD.