IDEAS home Printed from https://ideas.repec.org/p/wrk/warwec/1235.html
   My bibliography  Save this paper

Terror and Tourism : The Economic Consequences of Media Coverage

Author

Listed:
  • Besley, Timothy

    (London School of Economics)

  • Fetzer, Thiemo

    (Warwick University)

  • Mueller, Hannes

    (IAE - CSIC)

Abstract

This paper studies the economic effects of news-coverage of violent events. To do so, we combine monthly aggregated and anonymized credit card data on tourism spending from 114 origin countries and 5 tourist destinations (Turkey, Egypt,Tunisia,Israel and Morocco) with a large corpus of more than 446 thousand newspaper articles covering news on the 5 destination countries from a subset of 57 tourist origin countries. We document that violent events in a destination are followed by sharp spikes in negative reporting at origin and contractions in tourist activity. Media coverage of violence has a large independent effect on tourist spending beyond what can be accounted for by controlling for the incidence of violence. We develop a model in which tourist beliefs, actual violence and media reporting are modelled together. This model allows us to quantify the effect of violent events and reporting.

Suggested Citation

  • Besley, Timothy & Fetzer, Thiemo & Mueller, Hannes, 2019. "Terror and Tourism : The Economic Consequences of Media Coverage," The Warwick Economics Research Paper Series (TWERPS) 1235, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:1235
    as

    Download full text from publisher

    File URL: https://warwick.ac.uk/fac/soc/economics/research/workingpapers/2019/twerp_1235_-_fetzer.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rabah Arezki & Valerie A. Ramey & Liugang Sheng, 2017. "News Shocks in Open Economies: Evidence from Giant Oil Discoveries," The Quarterly Journal of Economics, Oxford University Press, vol. 132(1), pages 103-155.
    2. Marco Manacorda & Andrea Tesei, 2020. "Liberation Technology: Mobile Phones and Political Mobilization in Africa," Econometrica, Econometric Society, vol. 88(2), pages 533-567, March.
    3. Dave Donaldson, 2018. "Railroads of the Raj: Estimating the Impact of Transportation Infrastructure," American Economic Review, American Economic Association, vol. 108(4-5), pages 899-934, April.
    4. Marc J. Melitz & Daniel Trefler, 2012. "Gains from Trade When Firms Matter," Journal of Economic Perspectives, American Economic Association, vol. 26(2), pages 91-118, Spring.
    5. Valerie A. Ramey, 2011. "Identifying Government Spending Shocks: It's all in the Timing," The Quarterly Journal of Economics, Oxford University Press, vol. 126(1), pages 1-50.
    6. Pedro Bordalo & Nicola Gennaioli & Yueran Ma & Andrei Shleifer, 2020. "Overreaction in Macroeconomic Expectations," American Economic Review, American Economic Association, vol. 110(9), pages 2748-2782, September.
    7. Fryer Roland & Jackson Matthew O., 2008. "A Categorical Model of Cognition and Biased Decision Making," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 8(1), pages 1-44, February.
    8. Timothy Besley & Robin Burgess, 2002. "The Political Economy of Government Responsiveness: Theory and Evidence from India," The Quarterly Journal of Economics, Oxford University Press, vol. 117(4), pages 1415-1451.
    9. Sascha O. Becker & Luigi Pascali, 2019. "Religion, Division of Labor, and Conflict: Anti-semitism in Germany over 600 Years," American Economic Review, American Economic Association, vol. 109(5), pages 1764-1804, May.
    10. Abel Brodeur, 2018. "The Effect of Terrorism on Employment and Consumer Sentiment: Evidence from Successful and Failed Terror Attacks," American Economic Journal: Applied Economics, American Economic Association, vol. 10(4), pages 246-282, October.
    11. Daron Acemoglu & Suresh Naidu & Pascual Restrepo & James A. Robinson, 2019. "Democracy Does Cause Growth," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 47-100.
    12. Stefano DellaVigna & Ethan Kaplan, 2007. "The Fox News Effect: Media Bias and Voting," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1187-1234.
    13. Stephen Hansen & Michael McMahon & Andrea Prat, 2018. "Transparency and Deliberation Within the FOMC: A Computational Linguistics Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 801-870.
    14. Torsten Persson & Guido Tabellini, 2009. "Democratic Capital: The Nexus of Political and Economic Change," American Economic Journal: Macroeconomics, American Economic Association, vol. 1(2), pages 88-126, July.
    15. Bursztyn, Leonardo & Cantoni, Davide & Funk, Patricia & Yuchtman, Noam, 2017. "Polls, the Press, and Political Participation: The Effects of Anticipated Election Closeness on Voter Turnout," CEPR Discussion Papers 12088, C.E.P.R. Discussion Papers.
    16. Timothy Besley & Hannes Mueller, 2012. "Estimating the Peace Dividend: The Impact of Violence on House Prices in Northern Ireland," American Economic Review, American Economic Association, vol. 102(2), pages 810-833, April.
    17. Ruben Durante & Paolo Pinotti & Andrea Tesei, 2019. "The Political Legacy of Entertainment TV," American Economic Review, American Economic Association, vol. 109(7), pages 2497-2530, July.
    18. Leonardo Bursztyn & Davide Cantoni & Patricia Funk & Felix Schönenberger & Noam Yuchtman, 2017. "Identifying the Effect of Election Closeness on Voter Turnout: Evidence from Swiss Referenda," NBER Working Papers 23490, National Bureau of Economic Research, Inc.
    19. Barrera, Oscar & Guriev, Sergei & Henry, Emeric & Zhuravskaya, Ekaterina, 2020. "Facts, alternative facts, and fact checking in times of post-truth politics," Journal of Public Economics, Elsevier, vol. 182(C).
    20. Benjamin Faber & Cecile Gaubert, 2016. "Tourism and Economic Development: Evidence from Mexico's Coastline," NBER Working Papers 22300, National Bureau of Economic Research, Inc.
    21. Hunt Allcott & Matthew Gentzkow, 2017. "Social Media and Fake News in the 2016 Election," NBER Working Papers 23089, National Bureau of Economic Research, Inc.
    22. Alberto Abadie & Javier Gardeazabal, 2003. "The Economic Costs of Conflict: A Case Study of the Basque Country," American Economic Review, American Economic Association, vol. 93(1), pages 113-132, March.
    23. Thomas Eisensee & David Strömberg, 2007. "News Droughts, News Floods, and U. S. Disaster Relief," The Quarterly Journal of Economics, Oxford University Press, vol. 122(2), pages 693-728.
    24. Tarek A Hassan & Stephan Hollander & Laurence van Lent & Ahmed Tahoun, 2019. "Firm-Level Political Risk: Measurement and Effects," The Quarterly Journal of Economics, Oxford University Press, vol. 134(4), pages 2135-2202.
    25. Rava Azeredo da Silveira & Michael Woodford, 2019. "Noisy Memory and Over-Reaction to News," AEA Papers and Proceedings, American Economic Association, vol. 109, pages 557-561, May.
    26. James Feyrer, 2019. "Trade and Income—Exploiting Time Series in Geography," American Economic Journal: Applied Economics, American Economic Association, vol. 11(4), pages 1-35, October.
    27. Thiemo Fetzer, 2020. "Can Workfare Programs Moderate Conflict? Evidence from India," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 3337-3375.
    28. Scott R. Baker & Nicholas Bloom & Steven J. Davis, 2016. "Measuring Economic Policy Uncertainty," The Quarterly Journal of Economics, Oxford University Press, vol. 131(4), pages 1593-1636.
    29. Timothy Besley & Thiemo Fetzer & Hannes Mueller, 2015. "The Welfare Cost Of Lawlessness: Evidence From Somali Piracy," Journal of the European Economic Association, European Economic Association, vol. 13(2), pages 203-239, April.
    30. James M. Snyder & David Strömberg, 2010. "Press Coverage and Political Accountability," Journal of Political Economy, University of Chicago Press, vol. 118(2), pages 355-408, April.
    31. Saumitra Jha & Moses Shayo, 2019. "Valuing Peace: The Effects of Financial Market Exposure on Votes and Political Attitudes," Econometrica, Econometric Society, vol. 87(5), pages 1561-1588, September.
    32. Sascha O. Becker & Luigi Pascali, 2019. "Religion, Division of Labor, and Conflict: Anti-semitism in Germany over 600 Years," American Economic Review, American Economic Association, vol. 109(5), pages 1764-1804, May.
    33. Mueller, Hannes & Rauh, Christopher, 2018. "Reading Between the Lines: Prediction of Political Violence Using Newspaper Text," American Political Science Review, Cambridge University Press, vol. 112(2), pages 358-375, May.
    34. Ruben Durante & Ekaterina Zhuravskaya, 2018. "Attack When the World Is Not Watching? US News and the Israeli-Palestinian Conflict," Journal of Political Economy, University of Chicago Press, vol. 126(3), pages 1085-1133.
    35. Manela, Asaf & Moreira, Alan, 2017. "News implied volatility and disaster concerns," Journal of Financial Economics, Elsevier, vol. 123(1), pages 137-162.
    36. Gary S. Becker & Yona Rubinstein, 2011. "Fear and the Response to Terrorism: An Economic Analysis," CEP Discussion Papers dp1079, Centre for Economic Performance, LSE.
    37. Benjamin Handel & Joshua Schwartzstein, 2018. "Frictions or Mental Gaps: What's Behind the Information We (Don't) Use and When Do We Care?," Journal of Economic Perspectives, American Economic Association, vol. 32(1), pages 155-178, Winter.
    38. David Strömberg, 2004. "Radio's Impact on Public Spending," The Quarterly Journal of Economics, Oxford University Press, vol. 119(1), pages 189-221.
    39. Prat, Andrea & Strömberg, David, 2011. "The Political Economy of Mass Media," CEPR Discussion Papers 8246, C.E.P.R. Discussion Papers.
    40. Cecile Gaubert, 2016. "Tourism and Economic Development: Evidence from Mexico's Coastline," 2016 Meeting Papers 298, Society for Economic Dynamics.
    41. Eric Neumayer, 2004. "The Impact of Political Violence on Tourism," Journal of Conflict Resolution, Peace Science Society (International), vol. 48(2), pages 259-281, April.
    42. Alessandro Iaria & Carlo Schwarz & Fabian Waldinger, 2018. "Frontier Knowledge and Scientific Production: Evidence from the Collapse of International Science," The Quarterly Journal of Economics, Oxford University Press, vol. 133(2), pages 927-991.
    43. Fetzer, Thiemo, 2019. "Can Workfare Programs Moderate Conflict? Evidence from India," The Warwick Economics Research Paper Series (TWERPS) 1220, University of Warwick, Department of Economics.
    44. Matthew Gentzkow & Jesse M. Shapiro, 2011. "Ideological Segregation Online and Offline," The Quarterly Journal of Economics, Oxford University Press, vol. 126(4), pages 1799-1839.
    45. Jetter, Michael, 2017. "Terrorism and the Media: The Effect of US Television Coverage on Al-Qaeda Attacks," IZA Discussion Papers 10708, Institute of Labor Economics (IZA).
    46. Francesco Amodio & Michele Di Maio, 2018. "Making Do With What You Have: Conflict, Input Misallocation and Firm Performance," Economic Journal, Royal Economic Society, vol. 128(615), pages 2559-2612, November.
    47. Hamilton, James D., 1990. "Analysis of time series subject to changes in regime," Journal of Econometrics, Elsevier, vol. 45(1-2), pages 39-70.
    48. Matthew Gentzkow, 2006. "Television and Voter Turnout," The Quarterly Journal of Economics, Oxford University Press, vol. 121(3), pages 931-972.
    49. Hunt Allcott & Matthew Gentzkow, 2017. "Social Media and Fake News in the 2016 Election," Journal of Economic Perspectives, American Economic Association, vol. 31(2), pages 211-236, Spring.
    50. Hannes Mueller, 2012. "Growth Dynamics: The Myth of Economic Recovery: Comment," American Economic Review, American Economic Association, vol. 102(7), pages 3774-3777, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mun, Seongjae & Han, Seung Hun & Kim, Hyeong Joon, 2021. "Terrorist attacks and total factor productivity," Economics Letters, Elsevier, vol. 202(C).
    2. Libertad González Luna & Tetyana Surovtseva, 2020. "Do more tourists promote local employment?," Economics Working Papers 1746, Department of Economics and Business, Universitat Pompeu Fabra.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Marco Manacorda & Andrea Tesei, 2020. "Liberation Technology: Mobile Phones and Political Mobilization in Africa," Econometrica, Econometric Society, vol. 88(2), pages 533-567, March.
    2. Brodeur, Abel & Yousaf, Hasin, 2019. "The Economics of Mass Shootings," IZA Discussion Papers 12728, Institute of Labor Economics (IZA).
    3. Cagé, Julia, 2020. "Media competition, information provision and political participation: Evidence from French local newspapers and elections, 1944–2014," Journal of Public Economics, Elsevier, vol. 185(C).
    4. Nina Czernich, 2012. "Broadband Internet and Political Participation: Evidence for G ermany," Kyklos, Wiley Blackwell, vol. 65(1), pages 31-52, February.
    5. Francesco Sobbrio, 2012. "A Citizen-Editors Model of News Media," RSCAS Working Papers 2012/61, European University Institute.
    6. Oliver Falck & Robert Gold & Stephan Heblich, 2014. "E-lections: Voting Behavior and the Internet," American Economic Review, American Economic Association, vol. 104(7), pages 2238-2265, July.
    7. Ruben Enikolopov & Alexey Makarin & Maria Petrova, 2020. "Social Media and Protest Participation: Evidence From Russia," Econometrica, Econometric Society, vol. 88(4), pages 1479-1514, July.
    8. Benesch, Christine & Loretz, Simon & Stadelmann, David & Thomas, Tobias, 2019. "Media coverage and immigration worries: Econometric evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 160(C), pages 52-67.
    9. Junze Sun & Arthur Schram & Randolph Sloof, 2019. "A Theory on Media Bias and Elections," Tinbergen Institute Discussion Papers 19-048/I, Tinbergen Institute.
    10. Sarah Schneider-Strawczynski & Jérôme Valette, 2021. "Media Coverage of Immigration and the Polarization of Attitudes," PSE Working Papers halshs-03322229, HAL.
    11. Campa, Pamela, 2018. "Press and leaks: Do newspapers reduce toxic emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 91(C), pages 184-202.
    12. Bruno Carvalho & Claudia Custodio & Benny Geys & Diogo Mendes & Susana Peralta, 2020. "Information, Perceptions, and Electoral Behaviour of Young Voters: A Randomised Controlled Experiment," Working Papers ECARES 2020-14, ULB -- Universite Libre de Bruxelles.
    13. Miner, Luke, 2015. "The unintended consequences of internet diffusion: Evidence from Malaysia," Journal of Public Economics, Elsevier, vol. 132(C), pages 66-78.
    14. Choe, Chongwoo & Raschky, Paul A., 2016. "Media, institutions, and government action: Prevention vs. palliation in the time of cholera," European Journal of Political Economy, Elsevier, vol. 41(C), pages 75-93.
    15. Francesco Sobbrio, 2014. "The political economy of news media: theory, evidence and open issues," Chapters, in: Francesco Forte & Ram Mudambi & Pietro Maria Navarra (ed.), A Handbook of Alternative Theories of Public Economics, chapter 13, pages 278-320, Edward Elgar Publishing.
    16. Alessandro Gavazza & Mattia Nardotto & Tommaso Valletti, 2019. "Internet and Politics: Evidence from U.K. Local Elections and Local Government Policies," Review of Economic Studies, Oxford University Press, vol. 86(5), pages 2092-2135.
    17. Michael Jetter, 2017. "Mediated Terrorism: US News and Al-Qaeda Attacks," CESifo Working Paper Series 6804, CESifo.
    18. Jetter, Michael, 2019. "The inadvertent consequences of al-Qaeda news coverage," European Economic Review, Elsevier, vol. 119(C), pages 391-410.
    19. Garz, Marcel & Sörensen, Jil, 2017. "Politicians under investigation: The news Media's effect on the likelihood of resignation," Journal of Public Economics, Elsevier, vol. 153(C), pages 82-91.
    20. Piolatto, Amedeo & Schuett, Florian, 2015. "Media competition and electoral politics," Journal of Public Economics, Elsevier, vol. 130(C), pages 80-93.

    More about this item

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F15 - International Economics - - Trade - - - Economic Integration
    • H12 - Public Economics - - Structure and Scope of Government - - - Crisis Management
    • L82 - Industrial Organization - - Industry Studies: Services - - - Entertainment; Media

    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:wrk:warwec:1235. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

    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.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with 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: Margaret Nash (email available below). General contact details of provider: https://edirc.repec.org/data/dewaruk.html .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.