Institutions, trust, relative income within the life satisfaction function a review on developed and developing countries

This study aims to present the importance of trust which is the basic indicator of social bond level, in life satisfaction function from three perspectives. Firstly, the importance of trust types in life satisfaction function, such as interpersonal trust, trust in public institutions and organizations, level of tolerance based on trust and living in a safe environment were evaluated within the scope of the second and third wave of the "Life Survey in Transition Survey" and the sixth wave of "World Values Survey" for developed, developing and transition countries. Second, in line with the criticisms of the community-centered trust formation model, by evaluating the endogenicity of trust, the causal mechanism between institutions, trust and life satisfaction was examined with instrument variable approach. Interpersonal trust estimated through belief in the existence of law and order affects life satisfaction with causal mechanism. Finally, the determinants of the individual's relative income position and the importance of trust among these determinants are evaluated. In this context, the factors affecting the relative income illusion which indicate the difference between the real income position and the relative income position and the factors affecting the relative income position, were examined comparatively. Generally sociodemographic and economic indicators that positively affect the higher relative income position, paradoxically negatively affect the relative income illusion. Trust has positive effects on relative income position and relative income illusion. Tthe evaluation of causal effects with instrument variable and the two stage probit method, the interpersonal trust provided by the institutional mechanism enables individuals to position themselves at higher levels in the income ladder steps. Key words: Institutions, Trust, Life Satisfaction, Relative Income, Instrumental Variable