IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v96y2012i5p553-567.html
   My bibliography  Save this article

Reality versus propaganda in the formation of beliefs about privatization

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272711001691
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Piketty, 1995. "Social Mobility and Redistributive Politics," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 551-584.
    2. Roland Benabou & Efe A. Ok, 2001. "Social Mobility and the Demand for Redistribution: The Poum Hypothesis," The Quarterly Journal of Economics, Oxford University Press, vol. 116(2), pages 447-487.
    3. Roland Bénabou, 2008. "Joseph Schumpeter Lecture Ideology," Journal of the European Economic Association, MIT Press, vol. 6(2-3), pages 321-352, 04-05.
    4. Corneo, Giacomo & Gruner, Hans Peter, 2002. "Individual preferences for political redistribution," Journal of Public Economics, Elsevier, vol. 83(1), pages 83-107, January.
    5. Roland Bénabou & Jean Tirole, 2006. "Belief in a Just World and Redistributive Politics," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 699-746.
    6. Alberto Alesina & Paola Giuliano, 2010. "The power of the family," Journal of Economic Growth, Springer, vol. 15(2), pages 93-125, June.
    7. Alberto Alesina & George-Marios Angeletos, 2005. "Fairness and Redistribution," American Economic Review, American Economic Association, vol. 95(4), pages 960-980, September.
    8. Stefano DellaVigna & Ethan Kaplan, 2007. "The Fox News Effect: Media Bias and Voting," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1187-1234.
    9. Denisova, Irina & Eller, Markus & Frye, Timothy & Zhuravskaya, Ekaterina, 2009. "Who Wants To Revise Privatization? The Complementarity of Market Skills and Institutions," American Political Science Review, Cambridge University Press, vol. 103(2), pages 284-304, May.
    10. Paola Giuliano, 2007. "Living Arrangements in Western Europe: Does Cultural Origin Matter?," Journal of the European Economic Association, MIT Press, vol. 5(5), pages 927-952, September.
    11. Augustin Landier & David Thesmar & Mathias Thoenig, 2008. "Investigating capitalism aversion [‘Why not a political Coase theorem? Social conflict, commitment and politics’]," Economic Policy, CEPR;CES;MSH, vol. 23(55), pages 466-497.
    12. Philippe Aghion & Yann Algan & Pierre Cahuc & Andrei Shleifer, 2010. "Regulation and Distrust," The Quarterly Journal of Economics, Oxford University Press, vol. 125(3), pages 1015-1049.
    13. Rafael Di Tella & Robert MacCulloch, 2009. "Why Doesn't Capitalism Flow to Poor Countries?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 40(1 (Spring), pages 285-332.
    14. Bisin, Alberto & Verdier, Thierry, 2000. "A model of cultural transmission, voting and political ideology," European Journal of Political Economy, Elsevier, vol. 16(1), pages 5-29, March.
    15. repec:cup:apsrev:v:21:y:1927:i:03:p:627-631_02 is not listed on IDEAS
    16. Edward L. Glaeser, 2005. "The Political Economy of Hatred," The Quarterly Journal of Economics, Oxford University Press, vol. 120(1), pages 45-86.
    17. Alesina, Alberto & La Ferrara, Eliana, 2005. "Preferences for redistribution in the land of opportunities," Journal of Public Economics, Elsevier, vol. 89(5-6), pages 897-931, June.
    18. Arthur T. Denzau & Douglass C. North, 1994. "Shared Mental Models: Ideologies and Institutions," Kyklos, Wiley Blackwell, vol. 47(1), pages 3-31, February.
    19. Shiller, Robert J & Boycko, Maxim & Korobov, Vladimir, 1991. "Popular Attitudes toward Free Markets: The Soviet Union and the United States Compared," American Economic Review, American Economic Association, vol. 81(3), pages 385-400, June.
    20. Eduardo Lora & Ugo Panizza, 2002. "Structural Reforms in Latin America under Scrutiny," Research Department Publications 4303, Inter-American Development Bank, Research Department.
    21. Sendhil Mullainathan & Joshua Schwartzstein & Andrei Shleifer, 2008. "Coarse Thinking and Persuasion," The Quarterly Journal of Economics, Oxford University Press, vol. 123(2), pages 577-619.
    22. Matthew Gentzkow & Jesse M. Shapiro, 2006. "Media Bias and Reputation," Journal of Political Economy, University of Chicago Press, vol. 114(2), pages 280-316, April.
    23. 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.
    24. Christina M. Fong & Erzo F.P. Luttmer, 2007. "What Determines Giving to Hurricane Katrina Victims? Experimental Evidence on Income, Race, and Fairness," NBER Working Papers 13219, National Bureau of Economic Research, Inc.
    25. Rafael Di Tella & Sebastian Galiant & Ernesto Schargrodsky, 2007. "The Formation of Beliefs: Evidence from the Allocation of Land Titles to Squatters," The Quarterly Journal of Economics, Oxford University Press, vol. 122(1), pages 209-241.
    26. David McKenzie & Dilip Mookherjee, 2003. "The Distributive Impact of Privatization in Latin America: Evidence from Four Countries," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 161-234, January.
    27. Jost, John T. & Blount, Sally & Pfeffer, Jeffrey & Hunyady, Gyorgy, 2003. "Fair Market Ideology: Its Cognitive-Motivational Underpinnings," Research Papers 1816, Stanford University, Graduate School of Business.
    28. Erzo F. P. Luttmer, 2001. "Group Loyalty and the Taste for Redistribution," Journal of Political Economy, University of Chicago Press, vol. 109(3), pages 500-528, June.
    29. Paul Milgrom & John Roberts, 1986. "Relying on the Information of Interested Parties," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 18-32, Spring.
    30. Alan S. Gerber & Dean Karlan & Daniel Bergan, 2009. "Does the Media Matter? A Field Experiment Measuring the Effect of Newspapers on Voting Behavior and Political Opinions," American Economic Journal: Applied Economics, American Economic Association, vol. 1(2), pages 35-52, April.
    31. repec:oup:ecpoli:v:23:y:2008:i::p:465-497 is not listed on IDEAS
    32. Peter M. DeMarzo & Dimitri Vayanos & Jeffrey Zwiebel, 2003. "Persuasion Bias, Social Influence, and Unidimensional Opinions," The Quarterly Journal of Economics, Oxford University Press, vol. 118(3), pages 909-968.
    33. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.
    34. Eduardo Lora & Mauricio Olivera, 2005. "The Electoral Consequences of the Washington Consensus," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 1-61, January.
    35. Bonnet, Céline & Dubois, Pierre & Martimort, David & Straub, Stéphane, 2009. "Empirical Evidence on Satisfaction with Privatization in Latin America: Welfare Effects and Beliefs," TSE Working Papers 09-020, Toulouse School of Economics (TSE).
    36. George R.G. Clarke & Katrina Kosec & Scott Wallsten, 2009. "Has private participation in water and sewerage improved coverage? Empirical evidence from Latin America," Journal of International Development, John Wiley & Sons, Ltd., vol. 21(3), pages 327-361.
    37. Bharat N. Anand & Ron Shachar, 2011. "Advertising, the matchmaker," RAND Journal of Economics, RAND Corporation, vol. 42(2), pages 205-245, June.
    38. Sebastian Galiani & Paul Gertler & Ernesto Schargrodsky, 2005. "Water for Life: The Impact of the Privatization of Water Services on Child Mortality," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 83-120, February.
    39. Julio J. Rotemberg, 2002. "Perceptions of Equity and the Distribution of Income," Journal of Labor Economics, University of Chicago Press, vol. 20(2), pages 249-288, Part.
    40. 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.
    41. Sebastian Galiani & Martin Gonzalez‐Rozada & Ernesto Schargrodsky, 2009. "Water Expansions in Shantytowns: Health and Savings," Economica, London School of Economics and Political Science, vol. 76(304), pages 607-622, October.
    42. Alberto Alesina & Edward Glaeser & Bruce Sacerdote, 2001. "Why Doesn't The US Have a European-Style Welfare State?," Harvard Institute of Economic Research Working Papers 1933, Harvard - Institute of Economic Research.
    43. Roland, Gerard & Verdier, Thierry, 1994. "Privatization in Eastern Europe : Irreversibility and critical mass effects," Journal of Public Economics, Elsevier, vol. 54(2), pages 161-183, June.
    44. Kevin M. Murphy & Andrei Shleifer, 2004. "Persuasion in Politics," American Economic Review, American Economic Association, vol. 94(2), pages 435-439, May.
    45. Piketty, Thomas, 1998. "Self-fulfilling beliefs about social status," Journal of Public Economics, Elsevier, vol. 70(1), pages 115-132, October.
    46. Fong, Christina, 2001. "Social preferences, self-interest, and the demand for redistribution," Journal of Public Economics, Elsevier, vol. 82(2), pages 225-246, November.
    47. Rotemberg, Julio J., 2008. "Minimally acceptable altruism and the ultimatum game," Journal of Economic Behavior & Organization, Elsevier, vol. 66(3-4), pages 457-476, June.
    48. repec:hrv:faseco:33078973 is not listed on IDEAS
    49. Jacob Glazer & Ariel Rubinstein, 2004. "On Optimal Rules of Persuasion," Econometrica, Econometric Society, vol. 72(6), pages 1715-1736, November.
    50. Alcazar, Lorena & Abdala, Manuel A. & Shirley, Mary M., 2000. "The Buenos Aires water concession," Policy Research Working Paper Series 2311, The World Bank.
    51. Prashant Malaviya, 2007. "The Moderating Influence of Advertising Context on Ad Repetition Effects: The Role of Amount and Type of Elaboration," Journal of Consumer Research, Oxford University Press, vol. 34(1), pages 32-40, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Lergetporer, Philipp & Schwerdt, Guido & Werner, Katharina & West, Martin R. & Woessmann, Ludger, 2018. "How information affects support for education spending: Evidence from survey experiments in Germany and the United States," Journal of Public Economics, Elsevier, vol. 167(C), pages 138-157.
    2. Jimenez Mori, Raul, 2021. "It’s not price; It’s quality. Satisfaction and price fairness perception," World Development, Elsevier, vol. 139(C).
    3. Katharina Werner, 2019. "Der Einfluss von Informationen auf die öffentliche Meinung zur Bildung - Erkenntnisse aus repräsentativen Befragungsexperimenten," ifo Beiträge zur Wirtschaftsforschung, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 82, November.
    4. 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.
    5. Martin R. West & Ludger Woessmann & Philipp Lergetporer & Katharina Werner, 2016. "How Information Affects Support for Education Spending: Evidence from Survey Experiments in Germany and the United States," CESifo Working Paper Series 6192, CESifo.
    6. Diendéré, Achille & Nguyen, Geneviève & Del Corso, Jean-Pierre & Kephaliacos, Charilaos, 2018. "Modeling the Relationship Between Pesticide Use and Farmers' Beliefs about Water Pollution in Burkina Faso," Ecological Economics, Elsevier, vol. 151(C), pages 114-121.
    7. Brian Knight & Ana Tribin, 2019. "The Limits of Propaganda: Evidence from Chavez’s Venezuela," Journal of the European Economic Association, European Economic Association, vol. 17(2), pages 567-605.
    8. Kuhn, Andreas, 2009. "In the Eye of the Beholder: Subjective Inequality Measures and the Demand for Redistribution," IZA Discussion Papers 4360, Institute of Labor Economics (IZA).
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. Raul Jimenez Mori, 2020. "It’s Not Price; It’s Quality. Satisfaction and Price Fairness Perception," Documentos de Trabajo LACEA 017786, The Latin American and Caribbean Economic Association - LACEA.
    14. Paul M. Romer, 2010. "Which Parts of Globalization Matter for Catch-up Growth?," NBER Working Papers 15755, National Bureau of Economic Research, Inc.
    15. Smith, Jeffrey A. & Whalley, Alexander & Wilcox, Nathaniel T., 2020. "Are Program Participants Good Evaluators?," IZA Discussion Papers 13584, Institute of Labor Economics (IZA).
    16. Engler, Daniel & Groh, Elke D. & Ziegler, Andreas, 2019. "The causal effect of religious and environmental identity on green preferences: A combined priming and stated choice experiment," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203610, Verein für Socialpolitik / German Economic Association.
    17. 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.
    18. Werner, Katharina, 2018. "Obstacles to Efficient Allocations of Public Education Spending," Rationality and Competition Discussion Paper Series 128, CRC TRR 190 Rationality and Competition.
    19. 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.
    20. 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.
    21. repec:hrv:faseco:33078973 is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Di Tella, Rafael & Dubra, Juan, 2008. "Crime and punishment in the "American Dream"," Journal of Public Economics, Elsevier, vol. 92(7), pages 1564-1584, July.
    2. Erzo F. P. Luttmer & Monica Singhal, 2011. "Culture, Context, and the Taste for Redistribution," American Economic Journal: Economic Policy, American Economic Association, vol. 3(1), pages 157-179, February.
    3. Rafael Di Tella & Juan Dubra & Robert MacCulloch, 2008. "A Resource Belief-Curse? Oil and Individualism," NBER Working Papers 14556, National Bureau of Economic Research, Inc.
    4. Rafael Di Tella & Ricardo Pérez-Truglia, 2010. "Conveniently Upset: Avoiding Altruism by Distorting Beliefs About Others," NBER Working Papers 16645, National Bureau of Economic Research, Inc.
    5. Corneo, Giacomo & Neher, Frank, 2015. "Democratic redistribution and rule of the majority," European Journal of Political Economy, Elsevier, vol. 40(PA), pages 96-109.
    6. Thomas Siedler & Bettina Sonnenberg, 2012. "Intergenerational Earnings Mobility and Preferences for Redistribution," SOEPpapers on Multidisciplinary Panel Data Research 510, DIW Berlin, The German Socio-Economic Panel (SOEP).
    7. Roland Bénabou & Jean Tirole, 2006. "Belief in a Just World and Redistributive Politics," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 699-746.
    8. Beatrix Eugster & Rafael Lalive & Andreas Steinhauer & Josef Zweimüller, 2011. "The Demand for Social Insurance: Does Culture Matter?," Economic Journal, Royal Economic Society, vol. 121(556), pages 413-448, November.
    9. Kuhn, Andreas, 2009. "In the Eye of the Beholder: Subjective Inequality Measures and the Demand for Redistribution," IZA Discussion Papers 4360, Institute of Labor Economics (IZA).
    10. Neher, Frank, 2012. "Preferences for redistribution around the world," Discussion Papers 2012/2, Free University Berlin, School of Business & Economics.
    11. Pfarr Christian & Ulrich Volker, 2011. "Discrete-Choice-Experimente zur Ermittlung der Präferenzen für Umverteilung," Review of Economics, De Gruyter, vol. 62(3), pages 232-262, December.
    12. Kerr, William R., 2014. "Income inequality and social preferences for redistribution and compensation differentials," Journal of Monetary Economics, Elsevier, vol. 66(C), pages 62-78.
    13. Andreas Georgiadis & Alan Manning, 2012. "Spend it like Beckham? Inequality and redistribution in the UK, 1983–2004," Public Choice, Springer, vol. 151(3), pages 537-563, June.
    14. Joan Costa-Font & Frank Cowell, 2015. "Social Identity And Redistributive Preferences: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(2), pages 357-374, April.
    15. Erik Schokkaert & Tom Truyts, 2017. "Preferences for redistribution and social structure," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 49(3), pages 545-576, December.
    16. Tella, Rafael Di & Donna, Javier & MacCulloch, Robert, 2008. "Crime and beliefs: Evidence from Latin America," Economics Letters, Elsevier, vol. 99(3), pages 566-569, June.
    17. Alesina, Alberto & Giuliano, Paola, 2009. "Preferences for Redistribution," IZA Discussion Papers 4056, Institute of Labor Economics (IZA).
    18. Kuhn, Andreas, 2009. "Demand for Redistribution, Support for the Welfare State, and Party Identification in Austria," IZA Discussion Papers 4449, Institute of Labor Economics (IZA).
    19. Cervellati, Matteo & Esteban, Joan & Kranich, Laurence, 2010. "Work values, endogenous sentiments redistribution," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 612-627, October.
    20. Elvire Guillaud, 2011. "Preferences for redistribution : an empirical analysis," Post-Print halshs-00594072, HAL.

    More about this item

    Keywords

    Beliefs; Privatization; Propaganda; Persuasion;
    All these keywords.

    JEL classification:

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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:96:y:2012:i:5:p:553-567. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nithya Sathishkumar). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.