The Economic Impacts of Terrorist Attacks

The Economic Impacts of Terrorist Attacks

Edited by Harry W. Richardson, Peter Gordon and James E. Moore II

Focussing on the economics of terrorism in the post 9/11 world, this book brings together original research based on the collaborative efforts of leading economists and planners. The authoritative and expert contributors use a variety of methodological approaches and apply them to different types of terrorist attacks (on airports, highways, seaports, electric power infrastructure, for example).

Chapter 9: Land Markets and Terrorism: Uncovering Perceptions of Risk by Examining Land Price Changes Following 9/11

Christian L. Redfearn

Subjects: economics and finance, public sector economics, transport, environment, disasters, transport, politics and public policy, terrorism and security, urban and regional studies, transport


Christian L. Redfearn INTRODUCTION On 1 August 2004, the Department of Homeland Security (DHS) issued a heightened security alert for financial institutions in the greater New York City area and Washington, DC. It was the first time that specific targets had been identified in a DHS security advisory. Previously, the department had issued broad warnings regarding the level of risk from attacks on domestic targets without guidance as to where, when or what type of attack might be expected. Yet even when advisories are non-specific regarding location, it is implicitly clear that not all locales within the US are equally exposed to the risk of attack. This chapter exploits spatial variation in presumed risk to measure the public’s assessment of actual risk from terrorism in the wake of the attacks of 9/11. At issue are behavioral – rather than rhetorical – responses to terrorism. From the reorganization of the federal government’s counter-terror activities to the media’s coverage of the ‘war on terror’, consumers have had ample reason to reconsider their actions in light of the attacks and subsequent revelations about terrorist activities. Is consumer behavior consistent with consumer opinion about terror? One recent study (Lerner et al., 2003) reported that two months after the attacks on New York City and Washington, DC survey respondents placed the probability of their being hurt in a terrorist attack at 10 per cent, while the probability that an ‘average American’ would be hurt by a terrorist attack was deemed to be 50 per...

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