Double-edged sword: persistent effects of Communist regime affiliations on well-being and preferences

During Communism, party members and their relatives were typically privileged elites in Central and Eastern Europe (CEE) and the former Soviet Union (FSU). At the same time, secret police informants were often coerced to spy and report on their fellow citizens. After the fall of Communism, CEE countries and the Baltics underwent decommunization, unlike most FSU countries. This paper is the first to empirically distinguish between these two Communist party regime affiliations and study their long-term implications for the well-being and preferences of affiliated individuals and their relatives. In the FSU, we find that individuals connected to the former Communist party are more satisfied with their lives, but those linked to secret police informants seem to have lower life satisfaction than those without such ties. The life satisfaction benefit of having former Communist regime party connections in the FSU is, on average, equivalent to one month’s household income. Simultaneously, the psychological costs of being an informant can amount to two monthly household incomes. In CEE countries, having informant connections is not associated with life satisfaction, but having links to the former Communist party is negatively correlated with subjective well-being. Formal and informal decommunization efforts are an important mechanism behind our findings. We also show that those connected to the former regimes differ from those without such connections in their preferences for democracy and market economy, levels of optimism, and risk tolerance, which provides suggestive evidence for the mechanisms underpinning our findings. Our results underscore that the former Communist regimes produced winners and losers based on the trustee status of their collaborators that decommunization efforts further shaped and solidified. Future decommunization efforts in the FSU may thus have important welfare implications.