Tuesday, July 13, 2010


Trust is important for a successful economy because without trust you can't enforce contracts. Instead of chasing the wants (and needs) of consumers, entrepreneurs and costumers try to cheat each other, extort from the rich, and fight over government largess. In cross country regressions, for what it's worth, trust positively is correlated with GDP.

Since trust is based on honesty, I wonder if this example will help spawn higher trust in Pakistan. Behavior can be catchy, so I'm glad their publicizing this on the BBC.

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