NBER

Christine Laudenbach

Goethe University Frankfurt
60629 Frankfurt am Main
Germany

E-Mail: EmailAddress: hidden: you can email any NBER-related person as first underscore last at nber dot org
Institutional Affiliation: Goethe University

NBER Working Papers and Publications

March 2020The Long-lasting Effects of Living under Communism on Attitudes towards Financial Markets
with Ulrike Malmendier, Alexandra Niessen-Ruenzi: w26818
We analyze the long-term effects of living under communism and its anticapitalist doctrine on households’ financial investment decisions and attitudes towards financial markets. Utilizing comprehensive German brokerage data and bank data, we show that, decades after Reunification, East Germans still invest significantly less in the stock market than West Germans. Consistent with communist friends-and-foes propaganda, East Germans are more likely to hold stocks of companies from communist countries (China, Russia, Vietnam) and of state-owned companies, and are unlikely to invest in American companies and the financial industry. Effects are stronger for individuals exposed to positive “emotional tagging,” e.g., those living in celebrated showcase cities. Effects reverse for individuals with ...

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