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Estimating the peace dividend: the impact of violence on house prices in Northern Ireland

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  • Timothy Besley
  • Hannes Mueller

Abstract

This paper exploits data on the pattern of violence across regions and over time to estimate the impact of the peace process in Northern Ireland on house prices. We begin with a linear model that estimates the average treatment effect of a conflictrelated killing on house prices - showing a negative correlation between house prices and killings. We then develop an approach based on an economic model where the parameters of the statistical process are estimated for a Markov switching model where conflict and peace are treated as a latent state. From this, we are able to construct a measure of the discounted number of killings which is updated in the light of actual killings. This model naturally suggests a heterogeneous effect of killings across space and time which we use to generate estimates of the peace dividend. The economic model suggests a somewhat different pattern of estimates to the linear model. We also show that there is some evidence of spillover effects of violence in adjacent regions.

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File URL: http://eprints.lse.ac.uk/25427/
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Bibliographic Info

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 25427.

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Length: 47 pages
Date of creation: May 2009
Date of revision:
Handle: RePEc:ehl:lserod:25427

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Measuring the peace dividend
    by Economic Logician in Economic Logic on 2009-10-02 02:22:00
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
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Cited by:
  1. Neil T.N. Ferguson & Maren M. Michaelsen, 2013. "The Legacy of Conflict – Regional Deprivation and School Performance in Northern Ireland," Ruhr Economic Papers 0419, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  2. Nicolas Ajzenman & Sebastian Galiani & Enrique Seira, 2014. "On the Distributive Costs of Drug-Related Homicides," CEDLAS, Working Papers 0158, CEDLAS, Universidad Nacional de La Plata.
  3. Hannes Mueller & Dominic Rohner & David Schoenholzer, 2013. "Tectonic Boundaries and Strongholds: The Religious Geography of Violence in Northern Ireland," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 13.04, Université de Lausanne, Faculté des HEC, DEEP.
  4. Arbel, Yuval & Ben-Shahar, Danny & Gabriel, Stuart & Tobol, Yossef, 2010. "The local cost of terror: Effects of the second Palestinian Intifada on Jerusalem house prices," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 415-426, November.
  5. Dustmann, Christian & Fasani, Francesco, 2013. "The Effect of Local Area Crime on Mental Health," IZA Discussion Papers 7711, Institute for the Study of Labor (IZA).
  6. Ksoll, Christopher & Macchiavello, Rocco & Morjaria, Ameet, 2010. "The Effect of Ethnic Violence on an Export-Oriented Industry," CEPR Discussion Papers 8074, C.E.P.R. Discussion Papers.
  7. Timothy Besley & Marta Reynal-Querol, 2012. "The Legacy of Historical Conflict Evidence from Africa," STICERD - Economic Organisation and Public Policy Discussion Papers Series 036, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
  8. Eli Berman & Joseph Felter & Ethan Kapstein & Erin Troland, 2012. "Predation, Economic Activity and Violence: Evidence from the Philippines," NBER Working Papers 18375, National Bureau of Economic Research, Inc.
  9. Nicolás Ajzenman & Sebastian Galiani & Enrique Seira, 2014. "On the Distributive Costs of Drug-Related Homicides," NBER Working Papers 20067, National Bureau of Economic Research, Inc.
  10. Jean-Pierre Tranchant & Patricia Justino & Cathérine Müller, 2014. "Political Violence, Drought and Child Malnutrition: Empirical Evidence from Andhra Pradesh, India," HiCN Working Papers 173, Households in Conflict Network.
  11. Eli Berman & Joseph Felter & Ethan Kapstein & Erin Troland, 2013. "Predation, Taxation, Investment and Violence: Evidence from the Philippines," NBER Working Papers 19266, National Bureau of Economic Research, Inc.
  12. Daniel R.C. Cerqueira & Rodrigo R. Soares, 2012. "The Welfare Cost of Homicides in Brazil: Accounting for Heterogeneity in the Willingness to Pay for Mortality Reductions," Textos para discussão 600, Department of Economics PUC-Rio (Brazil).
  13. Singh, Prakarsh, 2011. "Impact of terrorism on investment decisions of farmers: evidence from the Punjab insurgency," MPRA Paper 33328, University Library of Munich, Germany.
  14. Claudio Frischtak & Benjamin R. Mandel, 2012. "Crime, house prices, and inequality: the effect of UPPs in Rio," Staff Reports 542, Federal Reserve Bank of New York.
  15. Christian Dustmann & Francesco Fasani, 2013. "The Effect of Local Area Crime on Mental Health," Working Papers 712, Queen Mary, University of London, School of Economics and Finance.
  16. Mthuli Ncube & Basil Jones & Zorobabel Bicaba, 2014. "Working Paper 197 - Estimating the Economic Cost of Fragility in Africa," Working Paper Series 2105, African Development Bank.
  17. He, Yinghua & Nielsson, Ulf & Wang, Yonglei, 2014. "The Cost of Political Tension: An Anatomy," TSE Working Papers 14-484, Toulouse School of Economics (TSE).

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