Journal of Economic Literature
ISSN 0022-0515 (Print) | ISSN 2328-8175 (Online)
Aggregate Shocks and the Formation of Preferences and Beliefs
Journal of Economic Literature
vol. 63,
no. 2, June 2025
(pp. 542–97)
Abstract
A growing body of work highlights how aggregate shocks shape preferences and beliefs. This review synthesizes findings from sociology, social psychology, and economics to explore the significance of these shocks, how the period in which they are experienced matters, and their lasting effects. It examines economic shocks such as recessions, inflation, and trade shocks, alongside noneconomic shocks like migrations, wars, terrorist attacks, pandemics, and natural disasters. Key conclusions emerge: aggregate shocks influence political preferences, risk attitudes, and institutional trust; experiences during young adulthood have stronger, enduring impacts; and economic shocks generally shift preferences toward the political right, while noneconomic yield more varied outcomes depending on the context. The review also evaluates empirical methodologies, their limitations, and mechanisms underlying these effects. By analyzing how shocks alter societal values and behaviors across generations, this work provides insights into the long-term consequences of major disruptions on individual and collective decision-making.Citation
Giuliano, Paola, and Antonio Spilimbergo. 2025. "Aggregate Shocks and the Formation of Preferences and Beliefs." Journal of Economic Literature 63 (2): 542–97. DOI: 10.1257/jel.20241674Additional Materials
JEL Classification
- D72 Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
- D81 Criteria for Decision-Making under Risk and Uncertainty
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
- D91 Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
- E32 Business Fluctuations; Cycles
- H23 Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies
- Z13 Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification