Reality versus propaganda in the formation of beliefs about privatization

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 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 if his/her household did not gain access to water after the privatization. Similarly, a person’s view of the water privatization 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. JEL: P16.