East German unhappiness: Churchliness and satisfaction with democracy are important explanations of the unhappiness rooted in the mentality gap between West Germans and East Germans

An anatomy of East German unhappiness: The role of circumstances and mentality, 1990–2018. Philipp Biermann, Heinz Welsch. Journal of Economic Behavior & Organization, Volume 181, January 2021, Pages 1-18. https://doi.org/10.1016/j.jebo.2020.11.027

Rolf Degen's take: https://twitter.com/DegenRolf/status/1352962608777846784

Highlights

• We decompose the satisfaction gap between East and West Germany into objective circumstances and subjective mentality.

• We use about 419,000 observations from the German socio-economic Panel, 1990–2018.

• Circumstances and mentality contribute in the proportion 55: 45%.

• The mentality gap is driven by birth cohorts socialized under different political regimes.

• Churchliness and satisfaction with democracy mediate the mentality-related gap.

• Within-person preference/mentality changes occur as individuals adjust to politico-economic shocks.

Abstract: We decompose the satisfaction gap between East and West Germany into objective circumstances and subjective mentality, the latter capturing the way circumstances are being evaluated. Using the methodology proposed by Senik (2014) we find circumstances and mentality to contribute in the proportion 55: 45%. The mentality-related gap is driven by birth cohorts socialized under different political regimes – communist and liberal-capitalist – and disappears for the youngest cohort group. Results point towards churchliness and satisfaction with democracy being important explanations of the mentality gap. Within-person changes of the mentality gap occurred as aspirations or worries concerning politico-economic shocks were adjusted.

Keywords: GermanyHappinessLife satisfactionReunificationMentalityCommunism