TY  - JOUR
AU  - Tella,Rafael Di
AU  - Galiani,Sebastian
AU  - Schargrodsky,Ernesto
TI  - Reality versus Propaganda in the Formation of Beliefs about Privatization
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 14483
PY  - 2008
Y2  - November 2008
UR  - http://www.nber.org/papers/w14483
L1  - http://www.nber.org/papers/w14483.pdf
N1  - Author contact info:
Rafael Di Tella
Harvard Business School
Soldiers Field Rd
Boston, MA 02163
Tel: 617/495-6000
E-Mail: rditella@hbs.edu

Sebastian F. Galiani
Washington University in Saint Louis
Campus Box 1208
St. Louis MO 63130-4899
E-Mail: galiani@economics.wustl.edu

Ernesto Schargrodsky
Universidad Torcuato Di Tella
E-Mail: eschargr@utdt.edu
AB  - Argentina privatized most public utilities during the 1990's but re-nationalized the main water company in 2006. We study beliefs about the benefits of the privatization of water services amongst low and middle income groups immediately after the 2006 nationalization. Negative opinions about the privatization prevail. These are particularly strong amongst households that did not benefit from the privatization and amongst households that were reminded of the government's negative views about the privatization. A person's beliefs of the benefits of the water privatization were almost 30% more negative (relative to other privatizations) if his/her household did not gain access to water after the privatization. Similarly, a person's view of the water privatization (relative to other privatizations) was 16% more negative if he/she was read a vignette with some of the negative statements about the water privatization that Argentina's President expressed during the nationalization process. Interestingly, the effect of the vignette on households that gained water is insignificant, while it is largest (and significant) amongst households that did not gain water during the privatization. This suggests that propaganda was persuasive when it had a basis on reality.
ER  -