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Adaptation patterns and consumer behavior as a dependency on terror

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  • Aviad Tur-Sinai

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Abstract

Terror may have dire implications for the public’s behavior. According to Kirschenbaum (J Homel Secur Emerg Manag 3(1/3):1–33, 2006 ), in order to minimize the expected impact of a terror incident the public has to adopt a “survival strategy”. According to the underlying research hypothesis of the study, the longer the terror incidents continue, the more the public accepts the possibility that it will be in this situation for the long term; therefore, the extent of its deviation from its ordinary consumer behavior steadily declines after each terror incident. By using daily trade data and an Event Studies econometric methodology, we found the existence of an adaptation trend among the consumer public. Thus, over time, the Israeli public internalized the realization that if it wishes to sustain a reasonable standard of living, it must minimize the disparity between its consumer economic behavior before a terror event and its behavior afterwards. Announcing more assassinations of terrorists was found to calm the public’s fears, when fears are judged by a return to more normal consumption patterns. Another finding is the existence of variance in the pace of this adaptation as a dependency of the type of good consumed: consistently, the adaptation is faster in regard to non-durable goods than to durable goods. This outcome is subject to interpretation, since durable goods may be viewed as “half-consumption goods, half-capital goods,” it stands to reason that capital goods would be more strongly affected than consumption goods. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Aviad Tur-Sinai, 2014. "Adaptation patterns and consumer behavior as a dependency on terror," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 13(2), pages 257-269, November.
  • Handle: RePEc:spr:minsoc:v:13:y:2014:i:2:p:257-269
    DOI: 10.1007/s11299-014-0154-8
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    Cited by:

    1. Mario Cedrini & Marco Novarese, 2015. "The challenge of fear to economics," Mind & Society: Cognitive Studies in Economics and Social Sciences, Springer;Fondazione Rosselli, vol. 14(1), pages 99-106, June.

    More about this item

    Keywords

    Adaptation; Event study; Durable goods; Non-durable goods; G14; L67; L68;

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • L68 - Industrial Organization - - Industry Studies: Manufacturing - - - Appliances; Furniture; Other Consumer Durables

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