Trust, tolerance and growth - new methods to find causal links

It is not a given that an economy will function well and contribute to increased prosperity. In recent years, economists have recognized that laws and regulations are important and affect people's willingness and ability to behave productively. "Soft" factors are now also analyzed by economists, who research morals and norms, as well as social attitudes such as trust and tolerance. People's views on their own actions and on other people can be of great economic importance. For example, honesty and trustworthiness can stimulate economic growth by enabling innovative risk-taking and smooth transactions. This project studies precisely how such cultural and social factors have an economic impact. Particular emphasis is placed on trying to establish causal relationships, i.e. what causes what in society. For example, there is much evidence that social trust leads to economic growth, but it is also possible that economic growth promotes trust in a society. Methodologically, it is often difficult to determine which is the case, but it is of great importance to clarify the nature of the causal relationship, not least to be able to give more precise advice to economic policy makers on how they should design policy. In three sub-projects, we explore how individuals' norms are shaped and how norms affect their choices, as well as the relationships between norms, institutions, and economic outcomes at the country level. In each sub-project, we use a newly developed methodology that allows us to establish causal relationships.