Where You Sit is Where You Stand: Policy Preferences in the Czechoslovak Transition

Abstract:     
This paper shows that systematic differences in policy preferences existed between Czechs and Slovaks in the early 1990s. In spite of having lived in the same institutional environment for almost 75 years and in spite of being subjected to the same policy shocks in that period, the Czechs displayed significantly stronger pro-market attitudes than the Slovaks. Those differences are not explained by a variation in ‘collective memory’ of the pre-communist era, differences in the levels of economic development before communism, differences in religiosity, legal origins or past institutions. To a large extent, however, the differences in policy preferences can be accounted for by the expected costs of transition in different areas of Czechoslovakia. In particular, the unemployment rate in 1994, after the core of the economic reforms had been adopted, accounts for almost one half of the differences in market-related policy preferences between Czechs and Slovaks in the early phases of the transition. It seems therefore that the variation in expectations about whether particular regions were likely to be winners or losers of the transition affected individual preferences over policy.

Number of Pages in PDF File: 29

Keywords: Policy preferences, Transition, Self-serving bias

JEL Classification: P52, D02

working papers series