Reality Versus Propaganda in the Formation of Beliefs About Privatization

37 Pages Posted: 17 Nov 2008 Last revised: 30 Jul 2022

See all articles by Rafael Di Tella

Rafael Di Tella

Harvard Business School - Business, Government and the International Economy Unit; National Bureau of Economic Research (NBER)

Sebastian Galiani

University of Maryland - Department of Economics

Ernesto Schargrodsky

Universidad Torcuato Di Tella

Date Written: November 2008

Abstract

Argentina privatized most public utilities during the 1990's but re-nationalized the main water company in 2006. We study beliefs about the benefits of the privatization of water services amongst low and middle income groups immediately after the 2006 nationalization. Negative opinions about the privatization prevail. These are particularly strong amongst households that did not benefit from the privatization and amongst households that were reminded of the government's negative views about the privatization. A person's beliefs of the benefits of the water privatization were almost 30% more negative (relative to other privatizations) if his/her household did not gain access to water after the privatization. Similarly, a person's view of the water privatization (relative to other privatizations) was 16% more negative if he/she was read a vignette with some of the negative statements about the water privatization that Argentina's President expressed during the nationalization process. Interestingly, the effect of the vignette on households that gained water is insignificant, while it is largest (and significant) amongst households that did not gain water during the privatization. This suggests that propaganda was persuasive when it had a basis on reality.

Suggested Citation

Di Tella, Rafael and Galiani, Sebastian and Schargrodsky, Ernesto, Reality Versus Propaganda in the Formation of Beliefs About Privatization (November 2008). NBER Working Paper No. w14483, Available at SSRN: https://ssrn.com/abstract=1301931

Rafael Di Tella (Contact Author)

Harvard Business School - Business, Government and the International Economy Unit ( email )

Cambridge, MA
United States
617-495-5048 (Phone)
617-496-5985 (Fax)

HOME PAGE: http://www.people.hbs.edu/rditella/

National Bureau of Economic Research (NBER)

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Sebastian Galiani

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States

Ernesto Schargrodsky

Universidad Torcuato Di Tella ( email )

Minones 2159
1428 Buenos Aires, 1428
Argentina
+54 11 4784 0080 (Phone)
+54 11 4783 3220 (Fax)

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