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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.

Suggested Citation

  • Di Tella, Rafael & Galiani, Sebastian & Schargrodsky, Ernesto, 2012. "Reality versus propaganda in the formation of beliefs about privatization," Journal of Public Economics, Elsevier, vol. 96(5), pages 553-567.
  • Handle: RePEc:eee:pubeco:v:96:y:2012:i:5:p:553-567
    DOI: 10.1016/j.jpubeco.2011.11.006
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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. Kuhn, Andreas, 2009. "In the Eye of the Beholder: Subjective Inequality Measures and the Demand for Redistribution," IZA Discussion Papers 4360, Institute for the Study of Labor (IZA).
    3. Brian Knight & Ana Tribin, 2016. "The Limits of Propaganda: Evidence from Chavez's Venezuela," NBER Working Papers 22055, National Bureau of Economic Research, Inc.
    4. 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.
    5. 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 119-151, October.
    6. Cruces, Guillermo & Perez-Truglia, Ricardo & Tetaz, Martin, 2013. "Biased perceptions of income distribution and preferences for redistribution: Evidence from a survey experiment," Journal of Public Economics, Elsevier, vol. 98(C), pages 100-112.
    7. 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.
    8. Del Bo, Chiara D. & Ferraris, Matteo & Florio, Massimo, 2017. "Governments in the market for corporate control: Evidence from M&A deals involving state-owned enterprises," Journal of Comparative Economics, Elsevier, vol. 45(1), pages 89-109.
    9. Jakobsson, Niklas & Kotsadam, Andreas & Syse, Astri & Øien, Henning, 2016. "Gender bias in public long-term care? A survey experiment among care managers," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 126-138.
    10. Paul M. Romer, 2010. "Which Parts of Globalization Matter for Catch-up Growth?," NBER Working Papers 15755, National Bureau of Economic Research, Inc.
    11. Athias, Laure & Wicht, Pascal, 2014. "Cultural Biases in Public Service Delivery: Evidence from a Regression Discontinuity Approach," MPRA Paper 60639, University Library of Munich, Germany.
    12. repec:hrv:faseco:33078973 is not listed on IDEAS

    More about this item

    Keywords

    Beliefs; Privatization; Propaganda; Persuasion;

    JEL classification:

    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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