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Why does greater trust in society increase GDP? How can you measure inequality? Before whom is the government to blame? Who earns more? Learn the answers to these questions in this summary of last year's IQ.HSE articles and research by HSE University scholars.
In the 17th and 18th centuries, merchants provided craftspeople with raw materials for processing and the manufacture of goods. The craftspeople laboured at home and production chain did not extend beyond the local community. Interestingly, a similar arrangement still exists in several small Russian towns. HSE University scholars Simon Kordonsky and Yury Plyusnin discovered and described the modern manifestation of this historical phenomenon.
The crisis of the 1990s not only prompted the country’s regions to return to their economic past but also showed the way into the future. In that decade, the Russian government stopped regulating prices, letting them rise or fall freely. Contrary to predictions, the impoverished population did not arise in protest. HSE University professor Oleg Khlevnyuk studied the reasons and mechanisms behind this peaceful transition to a market economy.
The prediction in 2019 was not for hunger riots, but an impending recession. The Center for Market Research, however, rejected this forecast as unfounded and pointed out that Russia had an annual average GDP growth rate of only slightly more than 1% over five years, lagging behind the 3.3%-3.5% global average.
Raw materials continue to dominate domestic exports, almost 94% of which were delivered by large Russian companies with revenues ranging from 2 billion rubles to more than 10 billion rubles per year. Although experts feel it is good that state policy has treated exports as a priority since 2016, they are concerned about the decision to increase export volume primarily with traditional products and excessive financial support by the state. A report by the Center for Structural Policy Studies and the Institute for Trade Policy analyzed these trends.
Economics is the only discipline in which the main character has a proper name — Homo œconomicus. Research by Centre of Development Institute expert Daria Avdeeva provides one more example of how the ‘human factor’ can influence economic indicators. Her findings suggest that a low level of trust among Russians is the reason why the country lags behind the world’s leaders in per capita GDP. International statistics confirm this: the higher the level of trust in society, the higher are incomes. Russians are cautious regarding their compatriots: fewer than 17% trust the majority of citizens and only 41% would trust others, depending on the person and circumstances.
Russians have a lack of trust not only for each other but also for stores, the producers of goods and the state. All of this negatively influences people’s relationship to the political system, according to HSE University sociologist Regina Resheteeva, who studied the attitudes of Moscow consumers.
Of the 28 countries that researcher Alla Salmina studied, Russians expressed the least desire to live in a democratic political system. In their own ‘outsider assessment,’ the Russian people gave the lowest rating to the work of democracy and its degree of development in Russia.
Russian society still holds traditional ideas about the leading role of the state. According to estimates by the Centre for Stratification Studies, only 17% of Russia's citizens do not need assistance from the state — but even those individuals believe the state is responsible for the social sphere.
Also, most poor people hold the state responsible for their problems. According to data supplied by Ekaterina Slobodenyuk, 74% of the very poor ‘according to income’ and 87% of those who consider themselves very poor believe that they fell below the poverty line not because they were lazy or made mistakes, but mainly through the fault of the state.
At the other extreme are the richest citizens, who represent 3%-5% of the population. They were not included in the study, but this segment is a world leader in terms of the income and wealth concentrated in its hands.
The wide gap between society and the few at the top as well as the high degree of monetary injustice causes strong reactions. In 2019, Natalia Tikhonova of HSE University presented a book on how to measure such inequality. One of the monograph’s authors, Svetlana Mareeva, explained this stratification to IQ.HSE. She said that Russian society is divided into three groups and that the group that ‘reflects the average standard of living’ is the largest, accounting for 38% of the population. That is even larger than in Western Europe.
In 2019, HSE scholars Yevgenia Balabanova and Veronika Deminskaya published the results of Russia’s first study on the problem of ‘hostile’ behaviour by senior staff. In the U.S., companies lose $24 billion annually from the constant practice of humiliating and suppressing subordinates. Researchers did not calculate the losses in Russia, but they did find that ‘hostile’ behaviour by senior staff was common, with 56% of employees saying they had experienced it to one degree or another.
Freelancers are better off in this sense, but they also have problems. Drawing on extensive surveys of the self-employed, Denis Strebkov and Andrei Shevchuk found that such labour eats up more time than ‘exploitative office work.’
Freelancers often work at night, on weekends and holidays. Still, they are not alone in this. More than 64% of Russians regularly work non-standard hours at their main place of employment. This problem is more acute in Russia than in all other European countries.
Anna Zudina and Nina Vishnevskaya found that 12% of Russian youth belong in the category of NEET (Young People Not in Employment, Education or Training), a figure similar to the European average.
The number of workers of this age is shrinking, while the number of older workers is increasing. The number of workers aged 50 or more has grown by 30% — or 4.5 million people — since 2005. This helps the economy, said Rostislav Kapelyushnikov and Anna Lukyanova. The elderly can work jobs in which young people had been more prevalent, which is extremely important given the fact that the population is ageing: in the coming decades, the number of young people will continue to decline while the number of elderly will increase.
Age ‘regulates’ the possibility of employment and salary size: IQ.HSE wrote about ageism earlier. Another ‘regulator’ also came to light in 2019 — a person’s psychological characteristics. How a person thinks, feels and conducts himself under certain circumstances affects the size of his salary. Ksenia Rozhkova was the first in Russia to measure the extent of this influence. Overall, character traits account for approximately 5% of the difference in salaries or roughly the same as the result of having a higher education.
Conscientiousness increases the chances of winning a job vacancy and openness contributes to higher incomes — a fact that cannot but please those who believe that people are responsible for their happiness. As many as 77% of those who consider themselves wealthy believe that life is determined by one's efforts rather than external factors. Such wealthy individuals, however, account for only 23% of the general population.