Learning, political attitudes and crises: Lessons from transition countries

This paper illustrates the sensitivity of political attitudes to the business cycle. It shows how the 2008 economic crisis has reshaped individual support for democracy and market liberalization in post-transition countries. Pro-reform attitudes have lost ground between 2006 and 2010 in Central and Eastern European countries that were hit by a negative economic shock. By contrast, they have increased in the CIS. Although on average, individual exposure to the crisis is associated with lower support to democracy and markets, it drives the demand for liberal reforms among groups of the population that were most excluded from the political-economic system in place, the youth particularly, in countries that lag behind in terms of liberalization and, where institutions are corrupt. We propose an interpretation of these evolutions in terms of learning and updating of beliefs.

► Support for democracy and a market economy is sensitive to the business cycle. ► Pro-democracy and market attitudes have receded in Central and Eastern Europe since 2006. ► The young are the drivers of a demand for political and economic liberalization. ► This is particularly the case in the most corrupt countries, notably the CIS. ► Social safety nets lessen the effect of economic downturns on political preferences.