The European debt crisis gave rise to policies of fiscal austerity designed to instill discipline and return economies to growth after a short-lived period of structural adjustment. Greece received several bailouts conditional on implementing severe spending cuts and structural reforms. These policies –many of them poorly implemented—led to a prolonged period of recession. While the economic effects of austerity policies and the political causes of the crisis have been studied extensively, less is known about their social impact. We explore the effects of the crisis on pro-sociality using new household-level survey data and quasi-behavioral evidence from Greece. We focus on the effects of joblessness, the most severe outcome of the economic downturn. We find a strong relationship between job loss and decreased generalized solidarity. We find evidence of ingroup bias in charitable giving; the bias is more pronounced among individuals with greater exposure to the consequences of austerity policies. However, this bias is only weakly mediated by beliefs that foreigners are to blame for the economic crisis.
Authors: Nicholas Sambanis (Penn), Anna Schultz (Penn), and Elena Nikolova (University College London)