## 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](https://www.imf.org/en/publications/wp/issues/2024/09/13/aggregate-shocks-and-the-formation-of-preferences-and-beliefs-554823)

## Other formats

- [Markdown version](/en/publications/wp/issues/2024/09/13/aggregate-shocks-and-the-formation-of-preferences-and-beliefs-554823/index.md)
- [Structured JSON version](/en/publications/wp/issues/2024/09/13/aggregate-shocks-and-the-formation-of-preferences-and-beliefs-554823/index.json)
- [Bundle manifest](/en/publications/wp/issues/2024/09/13/aggregate-shocks-and-the-formation-of-preferences-and-beliefs-554823/bundle-manifest.json)

## Bibliographic details
- Authors: Paola Giuliano, Antonio Spilimbergo
- Published: September 13, 2024
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9798400288654.001

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### 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.

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## Content in this bundle

- **Working Paper**
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_Source: https://www.imf.org/en/publications/wp/issues/2024/09/13/aggregate-shocks-and-the-formation-of-preferences-and-beliefs-554823_