A Different Look at Lenin's Legacy: Trust, Risk, Fairness and Cooperativeness in the Two Germanies

42 Pages Posted: 10 Jan 2011

See all articles by Guido Heineck

Guido Heineck

University of Bamberg; IZA Institute of Labor Economics

Bernd Süssmuth

University of Leipzig; CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 3 versions of this paper

Date Written: December 14, 2010

Abstract

What are the long-term effects of Communism on economically relevant notions such as social trust? To answer this question, we use the reunification of Germany as a natural experiment and study the post-reunification trajectory of convergence with regard to individuals’ trust and risk, as well as perceived fairness and cooperativeness. Our hypotheses are derived from a model of German reunification that incorporates individual responses both to incentives and to values inherited from earlier generations as recently suggested in the literature. Using data from the German Socio-Economic Panel, we find that despite twenty years of reunification East Germans are still characterized by a persistent level of social distrust. In comparison to West Germans, they are also less inclined to see others as fair or helpful. Implied trajectories can be interpreted as evidence for the passing of cultural traits across generations and for cooperation being sustained by values rather than by reputation. Moreover, East Germans are found to be more risk loving than West Germans. In contrast to trust and fairness, full convergence in risk attitude is reached in recent years.

Keywords: social trust, risk attitudes, political regimes, German reunification

JEL Classification: P51, Z31

Suggested Citation

Heineck, Guido and Süssmuth, Bernd, A Different Look at Lenin's Legacy: Trust, Risk, Fairness and Cooperativeness in the Two Germanies (December 14, 2010). SOEPpaper No. 345. Available at SSRN: https://ssrn.com/abstract=1736587 or http://dx.doi.org/10.2139/ssrn.1736587

Guido Heineck (Contact Author)

University of Bamberg

Feldkirchenstr. 21
Bamberg, 96052
Germany

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Bernd Süssmuth

University of Leipzig ( email )

IEW Institute for Empirical Research in Economics
Grimmaische Str. 12
Leipzig, D-04109
Germany
+49 341 97 33782 (Phone)
+49 341 97 33789 (Fax)

HOME PAGE: http://www.wifa.uni-leipzig.de/iew/professur-oekonometrie/team/prof-dr-bernd-suessmuth.html

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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