System Change, Learning and Public Opinion about the Economy

Abstract

This study examines attitudes about the economy under conditions of system change. We argue that citizens in new market economics are relative novices with regard to understanding the new economic environment at the beginning of the transition phase, but that they accumulate experience as time passes. We develop and test two hypotheses: (1) we expect that, over time, economic perceptions more closely track objective economic performance; (2) as a corollary, we hypothesize that, over time, economic policy priorities of citizens in a new market economy more closely track objective economic performance. Time-series data of objective economic indicators and public opinion collected in East Germany between 1991 and 1995 are analysed using regression analyses and tests of structural change in parameters. We find that East Germans' economic perceptions correspond to actual economic trends as they develop experience with the political-economic system. The implications of our findings for research on the relationship between the economy and political support in societies in transition are discussed.