Do Institutions Affect Social Preferences? Evidence from Divided Korea |
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| Institution: | 1. Seoul National University, Korea;2. Columbia University, United States, and Institute for Fiscal Studies, United Kingdom;3. Hanyang University Contemporary Korea Studies Institute, Korea;1. Bank of Italy, Structural Economic Analysis Directorate, Via Nazionale 91, 00184 Roma, Italy;2. Department of Economics and Statistics, University of Siena, Piazza San Francesco 7, 53100 Siena, Italy;1. Department of Economics, Wesleyan University, Middletown CT 06457 USA;2. Wesleyan University USA;1. School of Urban & Regional Science, Shanghai University of Finance & Economics, 777 Guoding Road, Shanghai 200433, China;2. Asian Development Bank Institute, Kasumigaseki Building 8F, 3-2-5, Chiyoda-ku, Tokyo 100-6008, Japan;3. Yunnan University of Finance & Economics, 237 Longquan Road, Kunming 650221, Yunnan, China |
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| Abstract: | The division of Korea is a historic social experiment that randomly assigned ex ante identical individuals into two different economic and political institutions. About 70 years after the division, we sample Koreans who were born and raised in the two different parts of Korea to study whether institutions affect social preferences. We find that those from North Korea behave in a less self-interested manner and support the market economy and democracy less than those from South Korea. A follow-up study shows that social preferences did not change considerably in two years. We check robustness against sample selection and potential confounding factors such as income differences. Our findings indicate that preferences are rooted in institutions. |
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