Growing up in recessions

I was reading this interesting paper from Paola Giuliano and Antonio Spilimbergo. It says:

Do generations growing up during recessions have different socio-economic beliefs than generations growing up in good times? We study the relationship between recessions and beliefs by matching macroeconomic shocks during early adulthood with self-reported answers from the General Social Survey. Using time and regional variations in macroeconomic conditions to identify the effect of recessions on beliefs, we show that individuals growing up during recessions tend to believe that success in life depends more on luck than on effort, support more government redistribution, but are less confident in public institutions. Moreover, we find that recessions have a long-lasting effect on individuals’ beliefs.

The paper is much like the inflation memories paper I had pointed a while ago. So, jsut like inflation, people tend to have memories for recession as well.

All these papers again point to the need to remember history not just from the angle of macroeconomic events but also the impact it had on people. However, much of our research only sees consumer/producer as a forward looking rational agent. In reality, people make their decisions based on the past experiences as well. It is a very important ingredient in their decision making.

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