Believe but Verify? Russian Views and the Market

Abstract

Prominent analysts have argued that the Russian reform process has gone badly because Russian attitudes towards the market mechanism fundamentally differ from those in the West. Others strenuously dispute this. We combine surveys and a classroom double auction experiment to investigate Russian beliefs about how the market mechanism works. Beliefs about how well economic theory predicts outcomes were elicited before ('ex ante') and after ('ex post') the double auction. Women, graduates of general secondary schools, children of Orthodox parents and children of entrepreneurs are more skeptical ex ante. Having observed the trading results women, children of Orthodox parents and children of entrepreneurs become less skeptical. However, graduates of general secondary schools remain relatively skeptical ex post. Two measures of political orientation are only weakly associated with beliefs, and sociodemographic characteristics, such as occupation, income and parents' education, have no detectable effect on beliefs about the predictive value of economic theory.