Hot, hot topic in economics research

Hotter even than--still--what got us out of the Great Depression.

Trust.

Here's Paulo Sapienza and Luigi Zingales: "Anti-Trust America: A trust deficit is driving our economy down".

Bruce Yandle: "Lost Trust: The Real Cause of the Financial Meltdown".

Robert J. Shiller was one of the first on the recent bandwagon with his Wall Street Journal piece about a month ago, "Animal Spirits Depend on Trust".

(Trend-spotter David Brooks is on board, too: "An Economy of Faith and Trust".)

The bad news is that trust is hard to study. The good news is that economists have been looking at it for a while. Paul J. Zak is one of the leaders. His 2001 Economic Journal paper (with Stephen Knack), "Trust and Growth" is interesting and already well-cited. (Working paper version.) Here's an application by Oguzhan C. Dincer and Eric M. Uslaner to data on U.S. states,

Comments

[kyle8]

Trust is another affirmation of dependability. No one can make long term economic plans if there is uncertainty of the future.

When the government is acting in a precipitous and mercurial manner then there is only uncertainty, and no plans are made.

[JorgXMcKie]

So far I see the Obama/Geithner economic policy as way too similar to a weathervane in a tornado.