Goodby Lenin

[michael perelman <michael@xxxxxxxxxxxxxxxxx>]

This paper suggests that perhaps communism distorted people's
preferences for redistribution, but eventually after a couple of
generations of capitalism, they come to their senses.

It is not really that bad, but that is my uncharitable interpretation.

"Good bye Lenin (or not?): The Effect of Communism on People's
Preferences"

     BY:  ALBERTO F. ALESINA
             Harvard University
             Department of Economics
             Centre for Economic Policy Research (CEPR)
             National Bureau of Economic Research (NBER)
          NICOLA FUCHS-SCHUNDELN
             Harvard University
             Department of Economics

Document:  Available from the SSRN Electronic Paper Collection:
          http://papers.ssrn.com/paper.taf?abstract_id=756786

Paper ID:  Harvard Institute of Economic Research Discussion
          Paper No. 2076

Contact:  ALBERTO F. ALESINA
  Email:  Mailto:aalesina@xxxxxxxxxxx
 Postal:  Harvard University
          Department of Economics
          Littauer Center
          Cambridge, MA 02138  UNITED STATES
  Phone:  617-495-8388
    Fax:  617-495-7730
Co-Auth:  NICOLA FUCHS-SCHUNDELN
  Email:  Mailto:nfuchs@xxxxxxxxxxx
 Postal:  Harvard University
          Department of Economics
          Littauer Center
          Cambridge, MA 02138  UNITED STATES

ABSTRACT:
Preferences for redistribution, as well as the generosities of
welfare states, differ significantly across countries. In this
paper, we test whether there exists a feedback process of the
economic regime on individual preferences. We exploit the
experiment of German separation and reunification to establish
exogeneity of the economic system. From 1945 to 1990, East
Germans lived under a Communist regime with heavy state
intervention and extensive redistribution. We find that, after
German reunification, East Germans are more in favor of
redistribution and state intervention than West Germans, even
after controlling for economic incentives. This effect is
especially strong for older cohorts, who lived under Communism
for a longer time period. We find that East Germans' preferences
converge towards those of West Germans, and we calculate that it
will take one to two generations for preferences to converge
completely.

--

Michael Perelman
Economics Department
California State University
michael at ecst.csuchico.edu
Chico, CA 95929
530-898-5321
fax 530-898-5901