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Reality versus propaganda in the formation of beliefs about privatization

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  • Di Tella, Rafael
  • Galiani, Sebastian
  • Schargrodsky, Ernesto

Abstract

Argentina privatized most public utilities during the 1990s but re-nationalized the main water company in 2006. We study beliefs about the benefits of the privatization of water services measured immediately after the 2006 nationalization. Negative opinions about privatization prevail. We find that “reality” can change beliefs: people who had first-hand experience observing the investments made by the privatized company have a better opinion of water privatization (relative to other privatizations) than people who did not gain access to water. The effect, while statistically significant, seems small adding only 0.8 points on a 1–10 scale. Moreover, the effect of priming subjects with government propaganda against privatization has an effect that almost offsets the effect of gaining water. However, our evidence suggests that the presence of firm investments makes beliefs about the benefits of privatization less susceptible to be affected by propaganda.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 96 (2012)
Issue (Month): 5 ()
Pages: 553-567

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Handle: RePEc:eee:pubeco:v:96:y:2012:i:5:p:553-567

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Web page: http://www.elsevier.com/locate/inca/505578

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Keywords: Beliefs; Privatization; Propaganda; Persuasion;

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Cited by:
  1. Denisova, Irina & Eller, Markus & Frye, Timothy & Zhuravskaya, Ekaterina, 2012. "Everyone hates privatization, but why? Survey evidence from 28 post-communist countries," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 44-61.
  2. Guillermo Cruces & Ricardo Pérez Truglia & Martín Tetaz, 2012. "Biased Perceptions of Income Distribution and Preferences for Redistribution: Evidence from a Survey Experiment," CEDLAS, Working Papers 0138, CEDLAS, Universidad Nacional de La Plata.
  3. Andreas Kuhn, 2009. "In the eye of the beholder: subjective inequality measures and the demand for redistribution," IEW - Working Papers 425, Institute for Empirical Research in Economics - University of Zurich.
  4. Rafael Di Tella & Ignacio Franceschelli, 2011. "Government Advertising and Media Coverage of Corruption Scandals," American Economic Journal: Applied Economics, American Economic Association, vol. 3(4), pages 119-51, October.
  5. Andreas Kuhn, 2009. "In the Eye of the Beholder: Subjective Inequality Measures and the Demand for Redistribution," NRN working papers 2009-14, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.

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