Financial Decisions under the Shadow of Terrorism

Christelis, Dimitris; Georgarakos, Dimitris

doi:10.2139/ssrn.1317086

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Financial Decisions under the Shadow of Terrorism

34 Pages Posted: 17 Dec 2008 Last revised: 7 Apr 2013

See all articles by Dimitris Christelis

Dimitris Christelis

Adam Smith Business School, University of Glasgow; Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II; Center for Financial Studies (CFS); Netspar; CSEF - University of Naples Federico II - Centre for Studies in Economics and Finance (CSEF)

Dimitris Georgarakos

European Central Bank (ECB) - Directorate General Research; Center for Financial Studies (CFS)

Date Written: April 4, 2013

Abstract

We investigate, using the 2002 US Health and Retirement Study, individuals’ insecurity and expectations about terrorism, and their effects on household financial decisions. We find that those without any military experience, the less educated, the more religious and females worry a lot about their safety. In addition, fear of terrorism discourages households from investing in stocks and owning a business, while it makes them more likely to buy term life insurance.

Keywords: terrorism, expectations, household finance, demand analysis

JEL Classification: D12, D14, D74, D84, G11

Suggested Citation: Suggested Citation

Christelis, Dimitrios and Georgarakos, Dimitris, Financial Decisions under the Shadow of Terrorism (April 4, 2013). Available at SSRN: https://ssrn.com/abstract=1317086 or http://dx.doi.org/10.2139/ssrn.1317086