Economic Reference Groups and Relative Deprivation in Post-Communist Eastern Europe

Grigore Pop-Eleches, Princeton University

August 6, 2008

Abstract

The present paper offers an exploratory analysis of the drivers and consequences of economic reference group choice in three post-communist East European countries: Romania, Moldova and Bulgaria. Even though a number of alternative reference groups - such as neighbors, parents and neighboring countries - will also be discussed, the main emphasis will be on three comparisons, which we should expect to play an important role in the post-communist context. First, the increasing penetration of Western media programming, combined with increasingly widespread international travel (for either pleasure or temporary work) and the growing number of East Europeans with friends or relatives living abroad, raised the salience of Western consumption models. Second, the nascent domestic economic elite with its often conspicuous consumption habits, became an increasingly visible reference point for ordinary people and arguably created a sense of relative poverty while others prospered. Third, the traumatic experience of the post-communist economic reform process understandably triggered frequent comparisons to communist-era living standards. While such inter-temporal comparisons are obviously not an exclusively post-communist phenomenon, their salience was arguably heightened in Eastern Europe both because the fall of communism provided such a major historical watershed and because politicians of all stripes used either positive or negative references to the communist past to pursue their political agendas.