Oil, Macro Volatility and Crime in the Determination of Beliefs in Venezuela

In: Venezuela Before Chávez: Anatomy of an Economic Collapse, chapter 13, edited by Ricardo Hausmann, and Francisco R. Rodríguez, Penn State University Press, 2014.

26 Pages Posted: 2 Oct 2015 Last revised: 2 Jun 2019

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)

Javier D. Donna

The Ohio State University

Robert MacCulloch

Imperial College London - Tanaka Business School

Date Written: February 16, 2007

Abstract

We use data on political beliefs (broadly, left-right position, meritocracy and origins of poverty) to discuss Venezuela’s economic institutions. Our starting point is the large role attributed to beliefs in determining the economic system and the extent of government intervention (see, for example, Alesina et al, 2001). This brings us to the question of what causes changes in beliefs. We briefly discuss and present some evidence consistent with the idea that some of the main social and economic forces that affected Venezuela this century may have changed people’s rational beliefs. These include a dependence on oil, a history of macro-economic volatility, the rise in crime and the rise in a preoccupation with corruption. We end up with a cautionary result: although these results point in the direction of giving a role to real shocks in the determination of beliefs, we test and find that perceptions for different phenomena are sometimes correlated. In particular, the perception of corruption is related to the perception of crime rather than the amount of real corruption actually experienced.

Keywords: beliefs, oil, crime, corruption, macro volatility, perceptions, causality

JEL Classification: P16, E62

Suggested Citation

Di Tella, Rafael and Donna, Javier D. and MacCulloch, Robert, Oil, Macro Volatility and Crime in the Determination of Beliefs in Venezuela (February 16, 2007). In: Venezuela Before Chávez: Anatomy of an Economic Collapse, chapter 13, edited by Ricardo Hausmann, and Francisco R. Rodríguez, Penn State University Press, 2014.. Available at SSRN: https://ssrn.com/abstract=2667587 or http://dx.doi.org/10.2139/ssrn.2667587

Rafael Di Tella

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)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Javier D. Donna (Contact Author)

The Ohio State University

425 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
United States
614-688-0364 (Phone)
614-292-3906 (Fax)

HOME PAGE: http://www.jdonna.org

Robert MacCulloch

Imperial College London - Tanaka Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

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