Aggregate Shocks and the Formation of Preferences and Beliefs

Paola Giuliano and Antonio Spilimbergo ()
Additional contact information
Antonio Spilimbergo: International Monetary Fund

No 17110, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: A growing body of work has shown that aggregate shocks affect the formation of preferences and beliefs. This article reviews evidence from sociology, social psychology, and economics to assess the relevance of aggregate shocks, whether the period in which they are experienced matters, and whether they alter preferences and beliefs permanently. We review the literature on recessions, inflation experiences, trade shocks, and aggregate non-economic shocks including migrations, wars, terrorist attacks, pandemics, and natural disasters. For each aggregate shock, we discuss the main empirical methodologies, their limitations, and their comparability across studies, outlining possible mechanisms whenever available. A few conclusions emerge consistently across the reviewed papers. First, aggregate shocks impact many preferences and beliefs, including political preferences, risk attitudes, and trust in institutions. Second, the effect of shocks experienced during young adulthood is stronger and longer lasting. Third, negative aggregate economic shocks generally move preferences and beliefs to the right of the political spectrum, while the effects of non-economic adverse shocks are more heterogeneous and depend on the context.

Keywords: aggregate shocks; preferences; beliefs (search for similar items in EconPapers)
JEL-codes: E00 P00 Z1 (search for similar items in EconPapers)
Pages: 73 pages
Date: 2024-07
New Economics Papers: this item is included in nep-evo and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations:

Forthcoming - forthcoming in: Journal of Economic Literature

Downloads: (external link)
https://docs.iza.org/dp17110.pdf (application/pdf)

Related works:
Working Paper: Aggregate Shocks and the Formation of Preferences and Beliefs (2024)
Working Paper: Aggregate Shocks and the Formation of Preferences and Beliefs (2024)
Working Paper: Aggregate Shocks and the Formation of Preferences and Beliefs (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp17110

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().