Culture and Institutions: Long-lasting effects of communism on risk and time preferences of individuals in Europe

Johannes Schaewitz, Mei Wang and Marc Oliver Rieger

Journal of Economic Behavior & Organization, 2022, vol. 202, issue C, 785-829

Abstract: Even three decades after the end of communism in Eastern Europe, there are still observable differences in financial risk and time preferences compared to Western Europe. Using data from two large-scale surveys – one including European countries (INTRA) and one for West and East Germany (SOEP) – we show that the causes of these differences are not the same: While differences in loss aversion and patience are most likely caused by deeply rooted cultural differences that date back even before communist times, other differences can be explained by experiences during the communist era and the transition processes that followed. These insights may also help to predict what differences are more likely to converge in the near future.

Keywords: Prospect theory; Time preferences; Socialist institutions; Transition; Cross-cultural comparison (search for similar items in EconPapers)
JEL-codes: D7 D8 D91 P3 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:202:y:2022:i:c:p:785-829

DOI: 10.1016/j.jebo.2022.07.009

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