Household economic decisions under the shadow of terrorism

Dimitris Christelis and Dimitris Georgarakos

No 2008/56, CFS Working Paper Series from Center for Financial Studies (CFS)

Abstract: We investigate, using the 2002 US Health and Retirement Study, the factors influencing individuals' insecurity and expectations about terrorism, and study the effects these last have on households' portfolio choices and spending patterns. We find that females, the religiously devout, those equipped with a better memory, the less educated, and those living close to where the events of September 2001 took place worry a lot about their safety. In addition, fear of terrorism discourages households from investing in stocks, mostly through the high levels of insecurity felt by females. Insecurity due to terrorism also makes single men less likely to own a business. Finally, we find evidence of expenditure shifting away from recreational activities that can potentially leave one exposed to a terrorist attack and towards goods that might help one cope with the consequences of terrorism materially (increased use of car and spending on the house) or psychologically (spending on personal care products by females in couples).

Keywords: Terrorism; Expectations; Household Finance; Demand Analysis (search for similar items in EconPapers)
JEL-codes: D12 D14 D74 D84 G11 (search for similar items in EconPapers)
Date: 2009
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Household Economic Decisions under the Shadow of Terrorism (2010)
Working Paper: Household Economic Decisions under the Shadow of Terrorism (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cfswop:200856

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