The Effects of Terrorism on Happiness: Evidence from Turkey

The economic impacts of terrorism have been extensively examined in the literature. Yet, there is a paucity of empirical research investigating the effect of terrorism on welfare. Existing studies suggest that, in addition to economic costs, terrorism also social costs. The aim of this paper is to examine the association of terrorism and life satisfaction for Turkey. This article employs both micro-data at individual level and macro-data at provincial level. In order to address income endogeneity, the conditional mixed process estimation method has been utilized. Estimation results indicate that terrorism hinders happiness. Additional factors such as perceived relative income, gender, employment status and household size have significant effects on happiness levels of individuals. Empirical results indicate that measuring only economic costs of terrorism fails capture the true extent of the costs imposed on the society. Additionally, single equation ordered probit estimates fail to capture the bidirectional relationship between life satisfaction and income level.