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Do institutions affect social preferences? Evidence from divided Korea

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Author Info

  • Byung-Yeon Kim
  • Syngjoo Choi

    (Institute for Fiscal Studies and University College London)

  • Jungmin Lee

    (Institute for Fiscal Studies and University of Arkansas)

  • Sokbae 'Simon' Lee

    ()
    (Institute for Fiscal Studies and Seoul National University)

  • Kyunghui Choi

Abstract

The Cold War division of Korea, regarded as a natural experiment in institutional change, provides a unique opportunity to examine whether institutions affect social preferences. We recruited North Korean refugees and South Korean students to conduct laboratory experiments eliciting social preferences, together with standard surveys measuring subjective attitudes toward political and economic institutions. Our experiments employ widely used dictator and trust games, with four possible group matches between North and South Koreans by informing them of the group identity of their anonymous partners. Experimental behaviour and support for institutions differ substantially between and within groups. North Korean refugees prefer more egalitatian distribution in the dictator games than South Korean students, even after controlling for individual characteristics that could be correlated with social preferences; however, the two groups show little difference in the trust game, once we control for more egalitarian behaviour of North Koreans. North Korean refugees show less support for market economy and democracy than South Korean subjects. Attitudes toward insitutions are more strongly associated with the experimental behaviours among South Korean subjects than among North Korean subjects. An online appendix to accompany this publication is available here

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Paper provided by Centre for Microdata Methods and Practice, Institute for Fiscal Studies in its series CeMMAP working papers with number CWP35/13.

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Date of creation: Aug 2013
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Handle: RePEc:ifs:cemmap:35/13

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Keywords: social preferences; experiment; institutions; market economy; democracy;

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  1. James Andreoni & John Miller, 2002. "Giving According to GARP: An Experimental Test of the Consistency of Preferences for Altruism," Econometrica, Econometric Society, vol. 70(2), pages 737-753, March.
  2. Algan, Yann & Cahuc, Pierre, 2014. "Trust, Growth, and Well-Being: New Evidence and Policy Implications," Handbook of Economic Growth, in: Handbook of Economic Growth, edition 1, volume 2, chapter 2, pages 49-120 Elsevier.
  3. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
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  7. Chaim Fershtman & Uri Gneezy, 2001. "Discrimination In A Segmented Society: An Experimental Approach," The Quarterly Journal of Economics, MIT Press, vol. 116(1), pages 351-377, February.
  8. Gachter, Simon & Herrmann, Benedikt & Thoni, Christian, 2004. "Trust, voluntary cooperation, and socio-economic background: survey and experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 55(4), pages 505-531, December.
  9. Samuel Bowles, 1998. "Endogenous Preferences: The Cultural Consequences of Markets and Other Economic Institutions," Journal of Economic Literature, American Economic Association, vol. 36(1), pages 75-111, March.
  10. Roland Benabou & Jean Tirole, 2011. "Laws and Norms," NBER Working Papers 17579, National Bureau of Economic Research, Inc.
  11. Cox, James C., 2004. "How to identify trust and reciprocity," Games and Economic Behavior, Elsevier, vol. 46(2), pages 260-281, February.
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