Do Institutions Affect Social Preferences? Evidence from Divided Korea

48 Pages Posted: 31 Aug 2013

See all articles by Byung-Yeon Kim

Byung-Yeon Kim

Sogang University - Department of Economics

Syngjoo Choi

University College London

Jungmin Lee

FIU; IZA Institute of Labor Economics

Sokbae Lee

University College London

Kyunghui Choi

University of Tokyo

Abstract

The Cold War division of Korea, regarded as a natural experiment in institutional change, provides a unique opportunity to examine whether institutions affect social preferences. We recruited North Korean refugees and South Korean students to conduct laboratory experiments eliciting social preferences, together with standard surveys measuring subjective attitudes toward political and economic institutions. Our experiments employ widely used dictator and trust games, with four possible group matches between North and South Koreans by informing them of the group identity of their anonymous partners. Experimental behavior and support for institutions differ substantially between and within groups. North Korean refugees prefer more egalitarian distribution in the dictator games than South Korean students, even after controlling for individual characteristics that could be correlated with social preferences; however, two groups show little difference in the trust game, once we control for more egalitarian behavior of North Koreans. North Korean refugees show less support for market economy and democracy than South Korean subjects. Attitudes toward institutions are more strongly associated with the experimental behaviors among South Korean subjects than among North Korean subjects.

Keywords: social preferences, experiment, institutions, market economy, democracy

JEL Classification: C92, C93, D03, P20

Suggested Citation

Kim, Byung-Yeon and Choi, Syngjoo and Lee, Jungmin and Lee, Sokbae and Choi, Kyunghui, Do Institutions Affect Social Preferences? Evidence from Divided Korea. IZA Discussion Paper No. 7567, Available at SSRN: https://ssrn.com/abstract=2318748

Byung-Yeon Kim (Contact Author)

Sogang University - Department of Economics ( email )

C.P.O. Box 1142
Seoul 100­611
Korea

Syngjoo Choi

University College London ( email )

Department of Economics
Gower Street
London WC1E 6BT
United Kingdom

HOME PAGE: http://www.homepages.ucl.ac.uk/~uctpsc0/

Jungmin Lee

FIU ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

IZA Institute of Labor Economics

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

Sokbae Lee

University College London ( email )

Gower Street
London
United Kingdom

Kyunghui Choi

University of Tokyo ( email )

No Address Available, Tokyo

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