Household economic decisions under the shadow of terrorism

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 
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). JEL Classification: D12, D14, D74, D84, G11
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Metadaten
Author:Dimitris Christelis, Dimitris Georgarakos
URN:urn:nbn:de:hebis:30-62357
Series (Serial Number):CFS working paper series (2008, 56)
Document Type:Working Paper
Language:English
Date of Publication (online):2009/01/29
Year of first Publication:2008
Publishing Institution:Univ.-Bibliothek Frankfurt am Main
Release Date:2009/01/29
Tag:Demand Analysis; Expectations ; Household Finance ; Terrorism
Note:
First Version: December 16, 2008 ; This Version: January 4, 2009
HeBIS PPN:210310456
Institutes:Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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