Working Paper: CEPR ID: DP7399
Authors: Paola Giuliano; Antonio Spilimbergo
Abstract: Do generations growing up during recessions have different socio-economic beliefs than generations growing up in good times? We study the relationship between recessions and beliefs by matching macroeconomic shocks during early adulthood with self-reported answers from the General Social Survey. Using time and regional variations in macroeconomic conditions to identify the effect of recessions on beliefs, we show that individuals growing up during recessions tend to believe that success in life depends more on luck than on effort, support more government redistribution, but are less confident in public institutions. Moreover, we find that recessions have a long-lasting effect on individuals? beliefs.
Keywords: belief formation; macroeconomic shocks; recession; role of the government
JEL Codes: E60; P16; Z13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Recessions during formative years (E32) | Beliefs that success depends more on luck than on effort (D80) |
| Recessions during formative years (E32) | Support for government redistribution (H19) |
| Recessions during formative years (E32) | Lower confidence in public institutions (D73) |
| Recessions during formative years (E32) | Beliefs about the role of luck versus effort (D91) |
| Recessions during formative years (E32) | Influence on beliefs about success (I24) |