IDEAS home Printed from https://ideas.repec.org/p/amz/wpaper/2026-27.html

Risk Aversion in the Shadow of Terrorism

Author

Listed:
  • Graeber, Daniel

    (DIW Berlin)

  • Meister, Lorenz

    (The Institute for New Economic Thinking at the Oxford Martin School (INET Oxford), University of Oxford)

  • Murray, Neil

    (DIW Berlin)

Abstract

Terrorism affects individuals far beyond its immediate victims, with large economic consequences. We estimate the effect of terrorism on risk preferences by merging geocoded panel data with the Global Terrorism Database in a staggered difference-in-differences design comparing those within and beyond 25 kilometers of attacks in Germany. Exposure reduces willingness to take risks by 2 percent of a standard deviation—localized, peaking after one year, dissipating within five—implying welfare losses near 106 million Euro annually. We classify 60,000 news articles with a fine-tuned language model and separate two media channels: the salience and the emotional tone of coverage. Holding attack severity fixed, responses are concentrated among attacks with more extensive and more negative coverage. The survey data corroborate media transmission—respondents who do not read newspapers do not respond—and point to declining happiness as the emotional mechanism. After severe attacks, self employment falls by 2 percentage points.

Suggested Citation

  • Graeber, Daniel & Meister, Lorenz & Murray, Neil, 2026. "Risk Aversion in the Shadow of Terrorism," INET Oxford Working Papers 2026-27, Institute for New Economic Thinking at the Oxford Martin School, University of Oxford.
    • Handle: RePEc:amz:wpaper:2026-27
    as

    Download full text from publisher

    File URL: https://oms-inet.files.svdcdn.com/production/files/Risk_Aversion_In_The_Shadow_Of_Terrorism_WP_Sep_26.pdf?dm=1790942568
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:amz:wpaper:2026-27. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: INET Oxford admin team (email available below). General contact details of provider: https://edirc.repec.org/data/inoxfuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.