Finished projects

Trust, Tolerance and Growth - New Methods for Establishing Causality

This project aims to identify causal relationships between social attitudes and economic outcomes, both on the country level and on the individual level. Economic outcomes are defined as, e.g., economic growth, trade, investments, entrepreneurship and activities relating to globalization. Social attitudes comprise, e.g., trust, tolerance and religion. This is a relatively new but fast-growing research field in economics, where we believe we can contribute with new knowledge, produced with new methods, about how the way the economy functions is affected by social, or cultural, factors.

Project director: Niclas Berggren

Project participants: Niclas Berggren, Andreas Bergh, Martin Ljunge and Therese Nilsson

Sponsor: Torsten Söderbergs stiftelse (2015–2016)


It is by no means always the case that an economy functions well and generates more wealth. Economists have relized, in recent years, that laws and rules are important and affect people's willingeness and opportunities to act productively. "Soft" factors are nowadays analyzed as well by economists who do research on morality, norms and social attitudes, like trust and tolerance. How people regard their own actions and other people may be of great economic importance. Honesty and reliability can, e.g., stimulate growth by enabling innovative risk-taking and smooth transactions. In this project we study how cultural and social factors of this kind relate to the economy. We especially focus on trying to estanlish causality: what cause what. For example, there are many indications of trust causing growth, but it is also possible that growth can generate trust. It is often methodologically difficult to discern in what way the effect goes, but in order to give high-quality policy advice, it is essential to clarify causality as much as possible. We do research on how individual norms are formed, how norms affect people's choices and how the relationships between norms, institutions and economic outcomese can be characterized on the country level.

The central starting-point for this project is that the economy does not function in a vacuum; rather, its actors and their behavior are influenced by both informal institutions (e.g., norms, traditions and systems of morality) and social attitudes (e.g., trust and tolerance). Earlier reserach has identified several interesting correlations and, probably, bicausal relationships (Algan and Cahuc 2013). Economic growth seems to be affected by certain social attitudes, such as social trust and certain religious behaviors and positions (Zak and Knack 2001; Durlauf et al. 2012). Spolaore and Wacziarg (2013) especially point out the important of studying whether social attitudes directly affect productivity or if they affect barriers against spreading productive and innovative ideas. At the same time growth brings with it social change (Friedman 2005). In order to further economic development it is essential to understand and identify causal relationships. New and sophisticated empirical methods enable us to better investigate the causality between social attitudes and economic outcomes.

These are some of the issues that we study:

  • How does social trust affect individuals' income development?
  • How is entrepreneurship affected by religion?
  • How does the welfare state influence social norms regarding work and welfare benefits?
  • How does international trade and cultural exchange affect tolerance?

Hence, the project moves beyond traditional economic explanations to see how culture, broadly conceived, may help explain economic outcomes.

International cooperation

Visiting researchers

Collaborating with others is essential for IFN as a research institute. Our researchers co-author articles with colleagues from other institutes, and many also teach at various universities and colleges.

As part of our extensive program of guest researchers, leading international researchers visit the institute. The visitors present and pursue their research as well as interact and cooperate with researchers at IFN.

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