The correlation between human capital and morality and its effect on economic performance: Theory and evidence

► Some economic activities are productive, while others are appropriative. ► The “morality” of economic agents influences which activities they choose. ► Main idea: within-country correlation between morality and human capital should matter. ► Evidence: Higher correlation leads to (substantially) higher per-capita incomes. ► Theory: Simple model serves as a possible framework for understanding empirical results.