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A Different Look at Lenin's Legacy: Trust, Risk, Fairness and Cooperativeness in the Two Germanies

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  • Guido Heineck
  • Bernd Süssmuth

Abstract

What are the long-term effects of Communism on economically relevant notions such as social trust? To answer this question, we use the reunification of Germany as a natural experiment and study the post-reunification trajectory of convergence with regard to individuals' trust and risk, as well as perceived fairness and cooperativeness. Our hypotheses are derived from a model of German reunification that incorporates individual responses both to incentives and to values inherited from earlier generations as recently suggested in the literature. Using data from the German Socio-Economic Panel, we find that despite twenty years of reunification East Germans are still characterized by a persistent level of social distrust. In comparison to West Germans, they are also less inclined to see others as fair or helpful. Implied trajectories can be interpreted as evidence for the passing of cultural traits across generations and for cooperation being sustained by values rather than by reputation. Moreover, East Germans are found to be more risk loving than West Germans. In contrast to trust and fairness, full convergence in risk attitude is reached in recent years.

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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 345.

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Length: 40 p.
Date of creation: 2010
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp345

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Keywords: Social trust; risk attitudes; political regimes; German reunification;

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References

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  1. Simon Gaechter & Benedikt Herrmann & Christian Thoeni, 2010. "Culture and Cooperation," Discussion Papers, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham 2010-09, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  2. Bernd Süssmuth & Malte Heyne & Wolfgang Maennig, 2010. "Induced Civic Pride and Integration," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(2), pages 202-220, 04.
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  1. Interesting readings
    by Ajay Shah in Ajay Shah's blog on 2010-10-11 05:01:00
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Cited by:
  1. Guido Heineck & Bernd Süßmuth, 2011. "Wie nachhaltig prägen uns politische Systeme? Evidenz aus der zweiten Dekade des Wiedervereinigungsprozesses," ifo Dresden berichtet, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 18(02), pages 23-26, 04.
  2. Leuermann, Andrea & Necker, Sarah, 2011. "Intergenerational transmission of risk attitudes: A revealed preference approach," Freiburg Discussion Papers on Constitutional Economics 11/4, Walter Eucken Institut e.V..
  3. Andreas Kuhn, 2011. "Inequality Perceptions, Distributional Norms, and Redistributive Preferences in East and West Germany," NRN working papers 2011-15, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  4. Andrea Leuermann & Sarah Necker, 2011. "Intergenerational Transmission of Risk Attitudes: A Revealed Preference Approach," SOEPpapers on Multidisciplinary Panel Data Research 412, DIW Berlin, The German Socio-Economic Panel (SOEP).

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