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Small investment and large returns: Terrorism, media and the economy

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  • Melnick, Rafi
  • Eldor, Rafi

Abstract

The study investigates the role of the media in the impact of terrorism on the economy. A unique data set of the newspaper articles that reported terrorist attacks during 2002 is used to evaluate their impact on the Tel Aviv Stock Exchange. An econometric analysis is performed in order to understand how a newspaper decides to cover a terrorist attack, i.e. the number of articles, positioning of articles, whether to include photos and the size of headlines. It was found that media coverage is an important channel through which terrorism produces economic damage. The findings also showed that the economic damage caused by terrorist attacks increases monotonically with the amount of media coverage. It was also found that the economic impact of the media coverage diminishes over time.

Suggested Citation

  • Melnick, Rafi & Eldor, Rafi, 2010. "Small investment and large returns: Terrorism, media and the economy," European Economic Review, Elsevier, vol. 54(8), pages 963-973, November.
    • Handle: RePEc:eee:eecrev:v:54:y:2010:i:8:p:963-973
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    Cited by:

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    3. Massimiliano Scopelliti & Maria Giuseppina Pacilli & Antonio Aquino, 2021. "TV News and COVID-19: Media Influence on Healthy Behavior in Public Spaces," IJERPH, MDPI, vol. 18(4), pages 1-15, February.
    4. J. W.B. Bos & M. Frömmel & M. Lamers, 2013. "FDI, Terrorism and the Availability Heuristic for U.S. Investors before and after 9/11," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 13/850, Ghent University, Faculty of Economics and Business Administration.
    5. 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).
    6. Jetter, Michael, 2017. "The effect of media attention on terrorism," Journal of Public Economics, Elsevier, vol. 153(C), pages 32-48.
    7. Gul, Tayyeba Gul & Hussain, Anwar Hussain & Bangash, Shafiqullah Bangash & Khattak, Sanam Waghma Khattak, 2010. "Impact of Terrorism on Financial Markets of Pakistan (2006-2008)," MPRA Paper 41990, University Library of Munich, Germany.
    8. Narayan, Paresh Kumar & Bannigidadmath, Deepa & Narayan, Seema, 2021. "How much does economic news influence bilateral exchange rates?," Journal of International Money and Finance, Elsevier, vol. 115(C).
    9. Elster, Yael & Zussman, Asaf & Zussman, Noam, 2017. "Rockets: The housing market effects of a credible terrorist threat," Journal of Urban Economics, Elsevier, vol. 99(C), pages 136-147.
    10. Gan Jin & Md Rafiul Karim & Günther G. Schulze, 2024. "The Stock Market Effects of Islamist versus Non-Islamist Terror," Discussion Paper Series 45 JEL Classification: D7, Department of International Economic Policy, University of Freiburg, revised Feb 2024.
    11. Friedrich Schneider & Tilman Brück & Daniel Meierrieks, 2015. "The Economics Of Counterterrorism: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(1), pages 131-157, February.
    12. Michael Jetter, 2017. "Mediated Terrorism: US News and Al-Qaeda Attacks," CESifo Working Paper Series 6804, CESifo.
    13. Ummad Mazhar, 2021. "Women empowerment and insecurity: firm-level evidence," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(1), pages 43-53, January.
    14. Oana Mădălina Popescu, 2019. "The impact of Terrorist Attacks on the World Economy. Stock Market Case Study," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 22(74), pages 100-113, December.
    15. Najam, Najam Ul Sabeeh & Mehmood, Arshad Mehmood, 2019. "The economic cost of terrorism and natural disasters: A deeper analysis of the financial market markets of Pakistan," MPRA Paper 92278, University Library of Munich, Germany.

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