Financial Decisions under the Shadow of Terrorism

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

Dimitris Christelis

Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II; Center for Financial Studies (CFS); ARC Centre of Excellence in Population Ageing Research (CEPAR); Netspar

Dimitris Georgarakos

Deutsche Bundesbank - Economic Research Centre; University of Leicester; 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

Christelis, Dimitris 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

Dimitris Christelis

Centre for Studies in Economics and Finance (CSEF), University of Naples Federico II ( email )

Via Cintia, Monte S. Angelo
Naples, NA 80126
Italy

Center for Financial Studies (CFS) ( email )

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

ARC Centre of Excellence in Population Ageing Research (CEPAR) ( email )

Australian School of Business
Ground Floor, East Wing UNSW Kensington Campus
Sydney, New South Wales NSW 2052
Australia
+61 (2) 9931 9202 (Phone)

HOME PAGE: http://www.cepar.edu.au

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Dimitris Georgarakos (Contact Author)

Deutsche Bundesbank - Economic Research Centre ( email )

Wilhelm-Epstein-Strasse 14
Frankfurt/Main D-60431
Germany

University of Leicester

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

Center for Financial Studies (CFS)

Grüneburgplatz 1
Frankfurt am Main, 60323
Germany

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