We investigate the effect of individual income on interpersonal trust levels, using longitudinal survey data for 22,219 Australians over the 2005-2014 period. Our results produce two key insights. First, we demonstrate the importance of accounting for individual-level fixed effects, as the income coefficient goes from positive and statistically significant in a pooled regression to negative and statistically significant in a fixed effects panel model. Second, this negative effect of income on trust holds only for men, and not for women.
This result appears to be concentrated among males who are young and moving from no income to positive income, but employment status is not the driving factor. Further, we explore a potential channel via psychological characteristics and find evidence of men reporting greater levels of neuroticism and fretfulness following an increase in income but, again, women do not. In turn, neuroticism and fretfulness are robust predictors of decreased trust levels; these additional findings are based on cross-sectional variation only, since both these variables are available in only one of the survey waves to date.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.