The Importance of Psychology in Economic Activity: Evidence from Terrorist Attacks / Kenneth R. Ahern.

By:

Ahern, Kenneth R

Contributor(s):

National Bureau of Economic Research

Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w24331.Publication details: Cambridge, Mass. National Bureau of Economic Research 2018.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: Terrorist attacks influence economic growth and individual psychology. However, identifying the direct effect of terrorism on economics and psychology is difficult because institutions also change in response to terrorist attacks. This paper controls for institutional responses to terrorist attacks by studying people who live beyond the institutions' borders, but are exposed to the attacks. I find that terrorism leads to declines in trust, subjective well-being, and the importance of creativity and freedom. However, at the macro-level, terrorism leads to increases in economic output and household income. These results are consistent with a growing literature that finds counterintuitive responses to trauma.

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Item type	Home library	Collection	Call number	Status	Date due	Barcode	Item holds
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Previous	nber w24329 Measuring the Equilibrium Impacts of Credit: Evidence from the Indian Microfinance Crisis /	nber w2433 The Effect of Mental Distress on Income: Results from a Community Survey /	nber w24330 Managing Financial Globalization: Insights from the Recent Literature /	nber w24331 The Importance of Psychology in Economic Activity: Evidence from Terrorist Attacks /	nber w24332 The Impact of Education on Family Formation: Quasi-Experimental Evidence from the UK /	nber w24333 Explaining the Decline in the U.S. Employment-to-Population Ratio: a Review of the Evidence /	nber w24334 The Impact of Big Data on Firm Performance: An Empirical Investigation /	Next

February 2018.

Terrorist attacks influence economic growth and individual psychology. However, identifying the direct effect of terrorism on economics and psychology is difficult because institutions also change in response to terrorist attacks. This paper controls for institutional responses to terrorist attacks by studying people who live beyond the institutions' borders, but are exposed to the attacks. I find that terrorism leads to declines in trust, subjective well-being, and the importance of creativity and freedom. However, at the macro-level, terrorism leads to increases in economic output and household income. These results are consistent with a growing literature that finds counterintuitive responses to trauma.