Aggregate Shocks and the Formation of Preferences and Beliefs
IMF Working Papers, September 13, 2024
Source details
- Canonical URL
- Aggregate Shocks and the Formation of Preferences and Beliefs
Other formats
Bibliographic details
- Authors: Paola Giuliano, Antonio Spilimbergo
- Published: September 13, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400288654.001
Scope and approach
- Reviews evidence from sociology, social psychology, and economics on how aggregate shocks affect formation of preferences and beliefs.
- Examines whether the period in which shocks are experienced matters and whether shocks alter preferences and beliefs permanently.
- Surveys literature on:
- recessions,
- inflation experiences,
- trade shocks,
- aggregate non-economic shocks including migrations, wars, terrorist attacks, pandemics, and natural disasters.
- For each aggregate shock, discusses:
- main empirical methodologies,
- limitations of those methodologies,
- comparability across studies,
- possible mechanisms when available.
Key empirical findings
- Aggregate shocks impact many preferences and beliefs, including:
- political preferences,
- risk attitudes,
- trust in institutions.
- Timing matters:
- The effect of shocks experienced during young adulthood is stronger and longer lasting.
- Directional patterns by shock type:
- Negative aggregate economic shocks generally move preferences and beliefs to the right of the political spectrum.
- Effects of non-economic adverse shocks are more heterogeneous and depend on the context.
Methodological considerations
- The review highlights differences in empirical methodologies across studies and notes their limitations.
- Comparability across studies is discussed, with mechanisms outlined whenever available.
Content in this bundle
- Working Paper