Journal of Social Research & Policy, Vol. 7, Issue 1, July 2016

Return to (Un)Happiness? Subjective Response of Romanians to Economic Crisis and Government Interventions between 2009 and 2012 SERGIU BĂLȚĂTESCU 1 University of Oradea, Romania

Abstract Very soon after the fall of the communism, Romania was confronted with an economic crisis that went on for almost ten years. With the objective of entering NATO and EU accomplished, and GDP rising to unprecedented levels, subjective well-being levels of Romanians returned to those from 1990. However, the critics looked with skepticism to this recovery, observing that the unfinished or wrongly directed reforms, together with undesirable outcomes that the capitalism brought such as increase in social inequality and anomie, conduced to a fragile economic and social system. Their apprehensions seem to be confirmed when Romania fully resented the new global economic crisis which started in 2008. In this paper I will analyze the response of Romanians to the menaces of economic crisis and government corrective measures between 2009 and 2012. I will examine variations in the structure and the inequality of subjective well-being, trying to explain how changes in the social situation of the socially excluded groups provoked a response from their part. I will show that the happiness of the Romanians decreased along these years. Partly, this had as effect the large scale protests which started at the end of 2011, which culminated with the demise of the Government. I conclude that potential for upheaval was not consumed entirely by this political change, and strong political dissatisfaction predicted further mass protest movements. Keywords: Subjective Well-being; Economic Crisis; Eastern European Countries; Transition.

Introduction The violent end of Ceausescu's regime in December 1989, gave rise to very high hopes for the Romanian population. Seen themselves as liberated from communism and plunged into democracy, citizens expected a very fast transformation that would make their country to catch up very soon with the Western European nations. Instead, it followed full decade of slow, chaotic (and sometimes violent) changes, on the background of an economic crisis that went on almost uninterruptedly. However, these hard times passed away, and gradually Romania met her objectives of entering NATO (in 2004) and European Union (in 2007). Starting with 2000, the direction of economic development reversed its downward spiral and in a few years Romania reached a steady growth. In fact, it was the country with the highest growth rates in Europe. GDP rise to unprecedented levels, giving the population again the hope in higher well-being. This elevated also the mood of the population, and in 2007 Romanian people subjective well-being levels returned to those from 1990. This was considered the end of a long period of economic depression which started with the fall of the communism. However, the critics looked with skepticism to this recovery, observing that the unfinished or wrongly directed reforms, together with undesirable outcomes that the capitalism brought such as increase in social inequality and anomie, conduced to a fragile economic and social system. Their apprehensions seem to be confirmed when Romania fully resented the new global economic crisis which started in 2008. 1 Postal Address: Department of Sociology and Social Work, University of Oradea, Str. Universitatii no.1, 410087 Oradea, Romania. E-mail Address: [email protected]

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Political and administrative reactions to the crisis were among the toughest in Europe, following the neoliberal path of reforms. In order to cut expenses, social and research programs were harshly cut. New employments in public sector were practically blocked (given the condition that seven employees should leave the system in order that one to be hired) and salaries in the public sector were cut by 25%. The protests were strangely almost insignificant at first. However, there were spontaneous uprisings in January 2012 which showed that the mood of the population changed dramatically. The right-wing ruling coalition lost the majority in the parliament and was also severely defeated in the elections at the end of the same year. In this paper, I will analyze the response of Romanians to economic crisis between 2009 and 2012. Using subjective indicators such as life satisfaction and satisfaction with political system, I will examine the variations in the structure and the inequality of subjective well-being, trying to explain how changes in the social situation of the socially excluded groups provoked a response from their part. I will show that the neoliberal reforms taken in answer to the crisis actually aggravated the problems that the capitalist development induced to the society and generated mass riots that culminated with the political changes that took place in the first part of 2012. The remainder of this paper is set out as follows. Section 2 provides a literature review of the economic and social processes in transitional countries. Then I will describe subjective wellbeing levels in transitional Romania. I will also make a short review of the changes in subjective perception within the period of the socio-economic crisis. In the final sub-section I will formulate hypotheses based on the literature reviewed. Section 3 considers the method used to address the research question, and Section 4 outlines the results of the research and discusses them. Section 5 summarizes and concludes the paper. Literature review Economic and social processes in transitional countries Often compared with revolutionary times that occurred exactly two hundred years before, 1989, the year of the fall of the communism, represented a major change in the course of history of Eastern Europe. The social and economic communist system collapsed throughout this whole region, with major geopolitical and social consequences. Central and Eastern European (CEE) societies aligned their goals at meeting the requirements of (re)building open and democratic societies based on the rule of law, social and economic freedom. They asked to be received back in the group of Western democratic societies, a status that communism prevented them to have for almost half of a century (or even more in case of the states within the former Soviet Union). 1990, the year of the fall of Berlin Wall, was characterized by high optimism concerning the date of integration of the CEE countries in the European Union. In fact, it was only a feel-good effect, and the drawback soon felt in these societies. Indeed, the gradually withdrawal of the state from the control of economic life of the country, and the fast pace of reform recommended by the liberalization policies conduced in the first pace to a disorganization of the markets and the accentuation of structural crises in the economy (trend that started way before 1989) together with the degradation of social conditions that characterized the last years of the communist regime. Secondly, the weakening of the state raised the corruption already existent in the system to unprecedented levels. State firms, the legacies of socialist system, were systematically sucked of any strength by their management, in tight cooperation with the new private firms. In most cases, the privatization required imperatively by the agreements with World Bank and IMF led these firms to bankruptcy. Workers became unemployed and their facilities were sold as junk, while the land they owned was the subject of fights between the local land mafia groups. The raise of unemployment made the state to be confronted with an increase in the requirements for social benefits that the weakening economy could not possibly support. Consequently, the states cut the social benefits, which affected the more unflavored groups such as unemployed, retired, families with many children (Zamfir & Zamfir, 1996). The cries for help were generally dismissed by the policy makers, at national as well as international levels, some of them

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retrospectively expressing their regrets about this choice – see for example Stiglitz (2002). The rise of economic inequality and corruption gave way to new illusory dreams of enrichment (unlawful schemes) and to cultural model that praised the smart (and often illicit) businessmen. As a result, the public mood rapidly deteriorated and the stressed population confronted with new negative states: anxieties, increased frustrations, depressions, feelings of alienation. Generally treated as inherent to the process of change, the state of the psychological changes in these nations were the focus of some narrow-field research activity (see for example Garst, Frese, & Molenaar, 2000; Lipowicz, 2007). The effects were in a much larger measure documented by the new indicators of quality of life implemented in the research and policy as a result of the catch-up of Eastern European research with the actual trends of social science in the West. After many sacrifices, economical adjustments finally gave fruits and since 2000 the economies started a steady growth, as Figure 1 shows. However, the global economic crisis started in 2008 and strongly affected the rather weak economies of these countries. 100 50 0 2003

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Slovakia Figure 1: Real GDP increase in 10 post-communist EU countries. Source: Cronos database (Eurostat, 2013) Compared with the very high increases in GDP, the crash in 2009 (with variations up to -17%) was a big challenge for all of these countries having strong social effects. Subjective well-being in transitional countries In the following, I will show the way subjective indicators such as satisfaction with life as a whole reflect these ups and downs in the economic trends in post-communist societies. I reviewed elsewhere (Bălţătescu, 2006) the main justification for the use of subjective indicators to monitor the process of transition, which I will present in short in the following. Firstly, these indicators reflect the perspective of the people on their lives, including attitudes concerning the level of living and social and political climate. Secondly, unlike the economic indicators, the subjective social indicators give a more comprehensive view of the state of society. They take into account a larger array of socio-economic situations, including the ‘collateral damages’ that the economy inflicts on population of a country. In the third place, measures such as satisfaction with life as a whole are indicators of popular support for economic policies, and they should be taken into account by any rational planning of change. Finally, average happiness/unhappiness of society reflect the way these societies settle up and reached the end of their transitions towards a more stable and sustainable level.

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Subjective well-being is defined as the way one's evaluate one's life globally (Andrews & Robinson, 1991). It comprises cognitive (satisfaction with life as a whole) and affective (negative and positive affect) components. At individual level, subjective well-being is moderately stable on short and medium term, but varies with change in the external conditions (Veenhoven, 1994). Subjective well-being is higher in countries and times with higher economic well-being (Stevenson & Wolfers, 2013), larger democratic rights (Veenhoven, 2000), and lower inequality (Oishi, Kesebir, & Diener, 2011; Ott, 2011). It is also influenced by socio-economic developments, including the latest financial crisis (Mertens & Beblo, 2011). Measures of subjective well-being have been previously used to monitor the change in various societies, starting with US and Canada and continuing to Germany and other West European countries. In the 1990s, the Eastern European science started to catch up with the Western trends. Significant comparative studies addressed the variations and structure of subjective well-being in transitional countries. With the higher integration of European research space, the number of comparative social researches increased even more, and European level surveys programs such as Eurobarometer, European Social Survey and European Quality of Life Survey offered a comprehensive look on the levels and correlates of subjective well-being in post-communist countries. What researchers found first was that we deal in this countries with the lowest levels of subjective well-being in Europe, which reflects the economic hardships and all the frustrations that the citizens of these countries endured, rather than the national character (see Veenhoven, 2001) for a discussion on national character and happiness in Russia). The overall trends starting with 1990 are an abrupt decline until 1997-1999 (Bălţătescu, 2007). The increase in the 2000s was continuous, as shown in Figure 2. 7,5

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Figure 2: Life satisfaction (0-10) in post-communist states (2001-2008). Sources: Candidate Countries Eurobarometers, Standard Eurobarometers This upward trend is, however, stopped and even reversed in 2009, when the consequences of the global economic crisis hit these countries. Economic crisis and subjective well-being in Romania In general, Romania followed the same trends in subjective well-being displayed by all the postcommunist countries. The violent rupture from communism (the Revolution which took place in December 1989) continued with a civil unrest at the beginning of the 1990s, which raised doubts on the commitment of Romanian leaders towards the Western inspired reforms. This rather aggravated the economic and social crisis that the society was plunged in, and postponed the start of recovery until the beginning of the 2000s. Since then, however, the national objectives started to be reached, with the admittance in NATO (in 2004) and in European Union (in 2007).

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All these developments shaped the trend in life satisfaction, as measured by the main survey program in Romania, Diagnosis of Quality of Life (Mărginean, 1990-2010). Overall, this trend shows a steep decline in the 1990s which culminated with the lowest level since transition registered in 1999. Starting with that period, levels climbed up to those from the 1990 in 2006, but measurements in 2010 showed again a slight decrease. However, the waves from this particular research program ends in 2010 and not cover the interval between 2006 and 2010 (Bălţătescu, 2014). By the end of 2010, almost two thirds of the Romanian households declared they were affected by the economic crisis (Codreanu & Fatu, 2012). Based on the reviewed literature we expect to find a decrease in subjective well-being after 2008, the year when the financial and economic crisis started. According to the results of the UNICEF project Rapid Assessment of the Social and Poverty Impacts of the Economic Crisis in Romania, the crisis mainly hit the middle-income group, who either lost their jobs or seen their wages diminished. Moreover, families who based their income on remittances seen these levels also decrease because of the crisis in the western and Southern European countries. The perceived impact on these categories aggravated from 2009 (where it was perceived as “only on TV”) to 2010 (when the population was “kneeled”) (Stănculescu & Marin, 2010). They coped by strongly reducing the non-food expenses, including those for their children’s education. The crisis also aggravated the quality of life of informal workers (including Roma), already at very low levels (result consistent with those in Island by Gudmundsdottir, 2013). The poorest families with children returned to the situation in the worst years of post-communist economic crisis (1997-2000) (Stănculescu & Marin, 2010). Eurobarometer data show Romania has between 2007 and 2010 the second largest proportional decrease in subjective well-being among the European Union members and candidate countries (Bjørnskov, 2014). The author put this result (among the data from other European countries) on the high regulation of the market, and argues for liberalizing economic reforms. Simultaneously with decrease in well-being levels, there were decreases in social trust (Habibov & Afandi, 2015). The authors found that Romania, as a low social trust country, was affected more than other European countries. Together with confidence in public institutions, the attitudes towards political system and market economy strongly deteriorated between 2006 and 2010 (European Bank for Reconstruction and Development, 2011). Hypotheses In this paper, we are interested in the trends in subjective indicators in Romania in the period of economic crisis. Our hypothesis is that subjective well-being of the Romanians decreased between 2009 and 2011, as a result of the economic crisis that hit the country but also of the Governmental interventions to limit the effect of the crisis. In 2009, the right-wing government coalition at that time chose painful expense cuttings that later were characterized as ineffective. Partly, this had produced the large-scale protests which started at the end of 2011, which culminated with the demise of the Government. However, the potential for upheaval was not consumed by the political change, and dissatisfaction remained at very high levels after this period, as further movements showed. Research method In the following I will analyze the following data sources: 1. Cronos database of Eurostat (Eurostat, 2006-2013), the most authoritative statistical data source on European Union. 2. Diagnosis of Quality of Life, a national survey with representative samples between 1000 and 1500 respondents, with yearly waves between 1990 and 1999, and waves in 2003, 2006 and 2010 (Mărginean, 1990-2010). 3. Standard Eurobarometers that included Romania, from 62 (autumn 2004) to 78 (autumn 2012) (European Commission, 2004-2012).

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The variables analyzed are: • Satisfaction with life as a whole (4 point single scale in Eurobarometer and 5 point single scale in Diagnosis of Quality of Life). • Satisfaction with political life (5 point single scale in Diagnosis of Quality of Life) To facilitate comparison, the above values were linearly transformed to a 0-10 scale. • GDP per capita in PPS (as computed by Eurostat) • Annual increase in GDP (%) (as computed by Eurostat) Results Life satisfaction trends in post-communist Romania Data from Diagnosis of Quality of Life (see figure 3) shows that average life satisfaction of Romanians varied around (and often below) the median line.

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Figure 3: Life satisfaction linearly converted to a 0-10 scale, with interpolating curve. Source: Diagnosis of Quality of Life The trend shows the same pattern of decrease in the 1990s as in other East European countries. There are local particularities linked with different moments of transition. The relative stagnation of the economic downturn at the end of the 1992-1996 electoral cycle, gave the possibility of a slight increase of the average level of satisfaction with life in 1995 (Bălţătescu, 2014). In the second part of the 1996-2000 electoral cycle, and mostly in 1999, all subjective social indicators were dramatically deteriorated, a fact which accompanied a similar trend in the climate of opinion (low trust in institutions, increasing dissatisfaction with the political system, etc.) (Zamfir, 2001). Economic growth since 2000 showed its effects also in the subjective indicators change. Life satisfaction increased reaching in 2006 similar levels with those from 1990. However, the upward trend seemed to reach the limits, as data from 2010 show. The three-four year’s interval between the Diagnosis of Quality of Life survey waves does not allow us to study the variation between the last two points in time. That is why I chose to study the data from Eurobarometers to see what happened in between. Data from Figure 4 show there were actually three different trends in this period. A continuous increase up to Spring 2008, when the maximum was reached. Then a steep decline with the lowest point in Spring 2010. After that, the levels are starting to increase again.

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Figure 4: Life satisfaction (0-10) in Romania (2004-2012). Source: Standard Eurobarometers. Trendline added manually. Data from Romanian Public opinion barometer (Bălţătescu, 2014) show a seasonal variation of life satisfaction, with spring levels higher than those in autumn. This variation seems to be confirmed in most of years by Eurobarometer data. By computing the average of spring and autumn levels, as shown in Figure 5, we reveal a similar overall trend, with the peak in 2007-2008. 5,2

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Figure 5: Life satisfaction (0-10) in Romania (2005-2012). Computed annually averages. Source: Standard Eurobarometers. Variations in life satisfaction and economic trends In the following I am interested to study comparatively variations in life satisfaction with trends in GDP. I leave with the premise that subjective well-being in transition varies in a rather small, but positive way with changes in GDP. Among the reasons are the following: • GDP indicators give a measure of the overall wealth of a nation but do not show how this wealth is distributed within the country. • The impact of changes in national well-being over individual well-being level is delayed by intrinsic economic mechanisms. For instance, the recession does not entail the loss of jobs immediately, but gradually. On the other hand, the deterioration of living conditions is slow and delayed, as in the case of the aging durable goods. • On the other hand, the influence of economic problems involved by the economic downturn is mediated by Government, by the welfare system. • Nationally, the economic growth or shrinking is accompanied by side effects on attitudes and strategies of life. As shown by Durkheim, economic growth brings

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anomic reactions, such as expectations rise too high in relation to the possibilities. On the opposite, people start to adapt to low quality of life. • At the individual and family levels there are mechanisms that reduce the influence of external factors on subjective well-being: adaptation, economic support of the family and of social networks (Bălţătescu, 2014). Additionally, subjective well-being responds not only to the real change in individual wellbeing, but to the perceived changes in national well-being that influence the public moods. The following represents variations in GDP per capita in PPS, as extracted from Chronos Database of the EUROSTAT. We can see that after the shock of 2009, GDP in Romania gradually increased.

GDP per capita in PPS 150000 100000 50000 0 2005 2006 2007 2008 2009 2010 2011 2012 Figure 6: GDP in Romania. Source: Cronos database When we compare proportional increases of life satisfaction (compared to 2004) and real national GDP increase, we see there is a similitude between the variations of the two variables. The three distinct trends which have been estimated in case of subjective well-being (increase between 2005 and 2008, decrease between 2008 and 2010 and increase afterward generally mirrors the variations in GDP (see Figure 7). 10% 5% 0% 2005

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Figure 7: Life satisfaction increases (compared to 2007) and real GDP increase in Romania. Sources: Standard Eurobarometers, Cronos database (Eurostat, 2006-2013). Compared to GDP, the lowest point for subjective well-being comes, however, with a delay of one year. The delayed effect of GDP variation on life satisfaction seems perfectly reasonable giving that economic adjustments, including rise in unemployment, as well as policy responses, have been also delayed. We can also take into account that Romania was in 2008 at the end of the electoral cycle, and the political leaders publicly dismissed worries about the influence of the ongoing crisis on Romania (2008), in order to maximize their chances for being elected.

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Public mood change and political effects When the global economic crisis started to spread in 2008, Romania had one of the highest economic growth rates in Europe (8.2 percent growth in in the first three months of the same year). The year coincided with the end of the electoral cycle and political leaders have been elusive when speaking of this topic of great concern throughout the globe. In 2009, however, the newly formed majority acknowledge the downward trend of Romanian economy and chose painful expense cuttings. Financing of social and scientific research programs were drastically reduced. New employments in public sector were practically blocked (with the condition that seven employees to leave the system in order that one to be hired) and salaries in the public sector were cut by 25%. The public mood deteriorated fast. Contrary to Voicu (2009), which found an increase of average life satisfaction after the presidential elections in 2008 (feel-good effect), the Eurobarometer data show that already in the same year life satisfaction levels were stagnating, and in 2009 we had already a decrease, with and lowest point reached in 2010. However, the public manifestation of these frustrations turned to anger when a much respected medical system leader, Raed Arafat, an opponent of the neo-liberal reforms in this sector, was publicly scorned by the President and forced to resign. This raised large scale protests which started at the end of 2011 (for the history of this movement see Presadă, 2012). Stoica (2012) analyzes the large-scale protests which started at the end of 2011. Giving the high social diversity of the participants, their numerous issues of protests, and their rejection of all current politicians, he concludes that these protests can be compared to Spain's "Indignados". However, demonstrations were much more focused towards the ruling government and generated a series of political changes that ended with the rejection from power of the party made responsible for the painful reforms. The President who supported these reforms was strongly rejected by public suffrage (87% voting 'yes' at the impeachment referendum, which, however, was invalidated because of the lack of quorum) and the ruling party (Liberal Democrats, a member of the European Popular Party) lost the elections December 2012 in a categorical manner. Was the potential for upheaval consumed by this political change? In the following I will briefly discuss this issue. Structural transformation in post-communist Romania and possibilities of change The supporters of the measures taken by the government led by Emil Boc between 2008 and 2012 maintain that the reforms were unavoidable and saved the country from a catastrophic crash. However, there may be reasons that its actions fall under the definition of bad governance, in the sense given by World Bank (1994). There are several motives for arguing that. First, the arbitrariness: cuts in public sector salaries were made without any public consulting. They were communicated and most probably largely inspired by the President. Even the Parliament was avoided to be consulted in this matter, as well as in other matters. The government had a record of highest number of emergency ordinances emitted, and ruling without the Parliament is a clear practice of bad governance2. Second, a part of the population (professors, medical personnel and all other categories of workers employed by the state) were used by the Government propaganda as scapegoats for the economic situation. While a few libertarian intellectuals from abroad considered it a first honest speech of a politician in this matter (Mitchell, 2010), the public position of the President that "the state sector is like a fat man of 200kg sitting on the back of a 50kg little man who is the real economy" was considered by Romanian population as cynical and insulting. It diminished the trust in politicians and the satisfaction with political life was down to a minimum in 2010, when measured by the Institute for Quality of Life (see Figure 8).

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It is no more true that the next government (Victor Ponta), had a similar frequency of emergency ordinances (Ionaşc, 2013).

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Satisfaction with political life (0-10) 6

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Figure 8: Satisfaction with political life (linearly converted to 0-10 scale). Source: Diagnosis of Quality of Life Such dissatisfaction with politics exceeded even the grimiest moments of 1999. Thus, by its public actions the ruling elite lowered the capacity of the government for designing and implementation of policies, which is one of the major component of good governance (World Bank, 1994). Low trust in government is dangerous in a democracy because it erodes the legitimacy of reforms (Nye, 1997). However, there are more structural factors that accentuate the public dissatisfaction and make it chronic. A synthetic indicator for these structural problems is the standard deviation of life satisfaction. Inequality in happiness in a society is a good indicator for structural inequalities, because it reflects not only large discrepancies in incomes in a society, but also in other components of quality of life such as housing, work, and social liberties (Veenhoven, 2005). The changes which took place in Romania conduced to a structural increase in inequality in life satisfaction (Figure 9).

Std. deviation life satisfaction 1 0,95 0,9 0,85

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Figure 9: Standard deviation for life satisfaction. Source: Diagnosis of Quality of Life While this reflects a change from the communist equalitarian society to a society in which individuals have more freedom to pursue their goals, this inequality is also a source of frustrations from the excludes groups and is the potential for further upheavals. Conclusion In this paper, I was interested by the way variations in subjective well-being reflected the changes in the situation of the Romanian population brought by the economic crisis and the harsh corrective measures by the government, which I characterized as having elements of bad governance. I showed that life satisfaction, the overall subjective indicator of personal well-

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being, was diminishing in the first 10 years of transition. Afterwards, it started to recovery and had a steady increase until the economic crisis of 2008, a trend similar to other post-communist countries. Throughout the studied period, variations in life satisfaction were found to correlate with ups and downs in real GDP. However, the lowest point for subjective well-being comes with a delay of one year, which I explained by the fact that economic adjustments, including rise in unemployment, as well as policy responses, have been also delayed. While the public mood deteriorated rather fast, the coagulation of protest movements took time and large-scale protests appeared only at the end of 2011. Finally, these movements were successful in generating political changes that ended with the removal from power of the party made responsible for the painful reforms. However, this whole process strongly eroded the public support for most governmental actions in Romania, a claim supported by the data which shows that dissatisfaction with political process reached the lowest levels throughout all post-communist era. When taking into account the structural changes in society, reflected by the increase in inequality in happiness, I conclude that the potential for upheavals in Romania was not consumed, and, despite the lack of tradition of mass protests in this country, this explains the mass anti-governmental movements that took place in the following years. Such approach has inherent limitations. While they are very useful in monitoring of social change, subjective indicators must be completed by a full theoretical model that will explain the relationships identified. Thus, we need a deeper understanding on how social factors such as economic standing and public mood affect the well-being of individuals. Future research should include in the model other variables which mediate the influence of economic crisis on personal and social well-being. References 1.

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Bălţătescu, S. (2006, 5-7 May). Transition is over, wait to see the benefits: a comparative evaluation of the effects of post-communist transition on life satisfaction. Paper presented at the ‘The End of Transitions? Central and Eastern European Countries in Comparative Perspective’, Central European University, Budapest. Retrieved May 20, 2014, from http://ssrn.com/abstract=2547181.

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Bălţătescu, S. (2007). Life Satisfaction of the new EU Members: Recent Trends and Future Prospects. In T. Muravska (Ed.), European Union Enlargement of 2004 and Beyond: Responding to the Political, Legal and Socio-Economic Challenges (pp. 337-352). Riga.

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Bălţătescu, S. (2014). Fericirea în contextul social al tranziţiei postcomuniste din România. Ediţia a doua, revizuită şi adăugită [Happiness in the social context of Romanian post-communist transition]. Cluj‐Napoca: EIKON.

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