As of Aug. 20, Europe’s bailout for Greece was officially over. So how did Greece’s decade of ruinous economic crisis affect its citizens — not just economically, but socially? Research and experience have shown us that some crises, such as natural disasters, bring people together. We found that that’s not true for economic crises.
The crisis in brief
In 2009, Greece’s government announced that its budget deficit was 12.9 percent of the country’s GDP, four times the European Union-mandated 3 percent limit. That announcement triggered a financial crisis. Greece had to borrow 289 billion euros to keep its economy running and prevent its expulsion from the euro zone; the loan came conditioned on Greece’s acceptance of austerity measures. Nearly a decade of recession, spending cuts and tax increases left many Greeks jobless; one-third are living in poverty today. While things might have been worse without the bailouts, Greek GDP dropped by 25 percent and the official unemployment rate rose to 27 percent.
Researchers have examined how economic crisis affects ordinary people’s attitudes in retrospective studies. They’ve found that living through a recession and losing a job leads to support for more government redistribution. In the United States, individuals who were more affected by the Great Recession are more selfish and less trusting of others. In short, economic crises change how people view governments and other people.
Researchers know that other kinds of crises, such as wars and natural disasters, can bring people together, leading them to be more altruistic and more involved with their communities — although these attitudes tend to be limited to others like themselves, of the same ethnic group or nationality.
We wanted to know whether economic crises had similar effects — in particular, in Greece.
We found that most Greek citizens were affected by the harsh effects of austerity. They blame the mainstream political parties along with European institutions, foreign governments and the International Monetary Fund. We suspected that those most affected would feel suspicious, angry and cut off from others; that their trust toward institutions would decline; and that they would feel especially estranged from foreigners.
Here is how we did our research
In a new paper, we show how we explored this hypothesis using data from a household survey and an experiment fielded in Greece from November 2015 to January 2016. We do find that Greeks who were significantly affected by the economic crisis feel less solidarity with others.
In collaboration with the European Bank for Reconstruction and Development and the World Bank, we conducted a face-to-face nationally representative survey of 1,500 Greeks in households across the country. The survey included a broad range of questions about demographics, employment, consumption, exposure to austerity policies, attitudes toward others and opinions about national and international institutions.
The overwhelming majority of respondents report that the crisis affected them “a fair amount” (38.5 percent) or “a lot” (53.4 percent). We focused on those who’d lost their jobs, both because it is one of the most severe results of an economic crisis, and because it has been used to study the effects of crises in the United States. By coding whether anyone in the household lost a job during the crisis, we find that 74 percent of those who answered yes also reported that the crisis affected them “a lot.”
With this data, we were able to examine how such household job losses were correlated with such social attitudes as charitable giving, expressions of trust and voting patterns. We controlled for individual income, age, gender, parental background and other variables that are probably correlated with different social outlooks and attitudes. For instance, since people who work in the public sector were protected against job losses, they may have responded differently — as a group — to the crisis than private-sector employees, whose jobs were at risk. To account for that, we controlled for public- and private-sector employment.
The survey included an experiment designed to measure social attitudes. We told respondents that a randomly selected sample of those taking the survey would win 40 euros, which they could keep or donate to charity. All participants were asked to register how they’d use their winnings and were offered a pair of charities to choose from.
We randomly assigned individuals to different pairs of charities to choose from, to test whether they were more or less generous depending on their degree of exposure to the crisis, and to test whether they were less generous with other Greeks or with foreigners. One group could choose between the “Social Grocery Store” (Κοινωνικό Παντοπωλείο), a charity primarily helping Greek citizens in need of food aid, and the Hellenic Red Cross, which respondents were told is an international organization that “works to provide food aid to refugees and immigrants in Greece” — in other words, a group that was mainly helping non-Greeks. A different group could choose between a recognizably Greek organization — “The Smile of the Child” (Χαμόγελο του Παιδιού), which helps children in need, and an international organization with a similar, though broader, mandate — the Hellenic Association for UNICEF, a subsidiary of UNICEF in Greece.
What we found
On average, respondents in our survey donated about 26 out of 40 euros to charity, which is high compared to similar experiments elsewhere. However, individuals who had lived in a household where someone lost a job were less likely to donate money — no matter how much money they made now.
Further, respondents were indeed more likely to be generous toward other Greeks. Those offered the first pair of charities allocated an average of 16 euros to the charity that helped Greeks in need and nine euros to the charity that helped distressed immigrants and refugees. Those who had been hurt more by the economic crisis were less likely to contribute to the out-group charities. As a proportion of the total amount given to charity, the decline in giving to non-Greeks was much larger than the decline in giving to Greeks.
We also find that job loss in the family makes people less trusting of others and of government institutions at home and abroad.
Why our findings matter
In short, we find that living through serious economic hardship reduces individuals’ feeling of solidarity with others and could make them more biased toward their own kind — which may explain nationalism and polarization afterward. That might help explain the rise of European extremist parties — and might slow down economic recovery in societies that mistrust both institutions and individuals.
Nicholas Sambanis is presidential distinguished professor and chair of the department of political science at the University of Pennsylvania, where he also directs the Penn Program on Identity and Conflict.
Anna Schultz is a postdoctoral researcher in the Program on Identity and Conflict at the University of Pennsylvania.
Elena Nikolova is an assistant professor at University College London, research fellow at the Central European Labor Studies Institute in Slovakia and an associate researcher at the Institute for East and Southeast European Studies in Regensburg, Germany.