How do financial crises affect economic perceptions? The 2008 financial crisis as a Case Study

Abstract: This study explores the effect of the 2008 global financial crisis on economic and social perceptions of the role of the state, civic responsibility, competition, and democracy in OECD countries. While much of the existing literature focuses on the impact of long-term processes such as modernization or industrialization, this study highlights the effects of short-term events such as economic crises. The central hypothesis is that the crisis had a differential effect on public attitudes across countries, depending on their initial social attitudes. I use data from two waves of the World Values Survey, conducted before and after the crisis in ten OECD countries. I group the countries into two groups of high—and low-pre-crisis public spending. I assume that this distinction reflects different social attitudes: social-democratic versus liberal-capitalist. I employ a Difference-in-Differences model, controlling for all demographic observable variables. This allows for comparisons both within countries over time and between countries with different levels of state involvement. I find some mixed results. On the one hand, I find a general convergence toward centrist political attitudes: countries with lower public spending shifted leftward, while those with higher spending shifted rightward. On the other hand, there has also been a decline in the perceived importance of living in a democratic country and in support for progressive taxation, with some opposing trends between the two groups, such as attitudes toward private business ownership. The study concludes that economic policy frameworks may shape public responses during crises, offering valuable insights for policymakers.