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

Format:

Book

Author/Creator:

Ahern, Kenneth R.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w24331.

NBER working paper series no. w24331

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Importance of Psychology in Economic Activity

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

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.

Notes:

Print version record

February 2018.