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A different look at Lenin's legacy: Social capital and risk taking in the two Germanies

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  • Heineck, Guido
  • Süssmuth, Bernd

Abstract

What are the long-term effects of Communism on economically relevant notions such as social trust, fairness, and scope of cooperation? To answer this question, we study the post-unification trajectory of convergence between East and West German individuals with regard to trust, cooperation, and risk. Our hypotheses are derived from a model of German unification that incorporates individual responses both to incentives and to values inherited from earlier generations as recently suggested in the literature. Using two waves of balanced panel data, we find that despite twenty years of unification East Germans are still characterized by a persistent level of social distrust. In comparison to West Germans, they are less inclined to see others as cooperative. East Germans are also found to have been more risk loving than West Germans. However, risk attitudes fully converged recently. --

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Bibliographic Info

Paper provided by University of Leipzig, Faculty of Economics and Management Science in its series Working Papers with number 118.

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Date of creation: 2012
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Handle: RePEc:zbw:leiwps:118

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Keywords: Social trust; Risk Attitudes; Political Regimes; German Unification;

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Cited by:
  1. Möhlmann, Axel, 2013. "Persistence or Convergence? The East-West Tax Morale Gap in Germany," MPRA Paper 50766, University Library of Munich, Germany, revised 27 Jul 2013.
  2. Friehe, Tim & Mechtel, Mario, 2014. "Conspicuous consumption and political regimes: Evidence from East and West Germany," European Economic Review, Elsevier, vol. 67(C), pages 62-81.
  3. Eibich, Peter & Ziebarth, Nicolas, 2013. "Examining the Structure of Spatial Health Effects using Hierarchical Bayes Models," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79844, Verein für Socialpolitik / German Economic Association.

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