סיקורי הטרור במדיה- ניו יורק

©All rights reserved to prof. Rafi Eldor March 2007Prof. Rafi Melnick

Recent research on the effect of terrorism on the economy has shown that terror attacks produce a relatively large negative impact on the economy; the impact is estimated to be of a macroeconomic magnitude.

What have we learned?


Fact: Small “investment” by terrorist organizations produce LARGE economic results

Open question: What is the transmission mechanism?

Finding the transmission mechanism is an important step in the design of a policy that will diminish the negative economic impact of terrorism thus becoming an important and effective counter-terrorist measure

What are the main issues?


The Impact of terrorism on financial markets: the Main Questions

1. The Israeli case and data serves as a “laboratory” for the developed world – market economies with developed financial markets

2. Did the latest massive terror attack, that followed the rupture of the peace process on September 27, 2000, have a general impact on the stock and currency markets in Israel?

3. Are all terror attacks alike?4. Is the effect of a terror attack permanent or

transitory? 5. And finally does the impact of terror diminishes

over time?


Table 1. Summary of Terror Attacks by Categories January 1990 – June 2003

Total Since September 27, 2000 Green Line1 In 275 140 Out 364 284 Large City1 Jerusalem 56 31 Tel Aviv 18 11 Haifa 5 5 Target Type1 Transport3 162 120 Facilities4 54 31 Personnel5 231 137 Military6 169 118 Government7 5 4 Attack Type1 Suicide 109 91 Cold Weapon 57 11 Armed Assault 379 272 Bombing 69 46 Kidnapping 19 3 Victims Killed2 1212 807 Victims Injured2 5726 4047 Number of Attacks 639 424 1 Qualitative categories treated as dummy variables in the econometric analysis. 2 Numerical variables treated as continuous variables in the econometric analysis. 3 Aircraft, Airport, Bus, Cargo Transport, Convoy, Ship, Train/Railway, Vehicle. 4 Bank, Beach/Waterfront, Building, Bus stop, Entertainment Facility, Garage, Hotel, Marketplace, Office, Place of Worship, Restaurant, School/University, Shopping Center, Store. 5 Businessperson, Civilian, Celebrity/Personality, Religious Figure, Student, Tourist. 6 Checkpoint/Border Crossing, Military Personnel, Police Facility/personal. 7 Diplomat, Embassy, Government Building, Government Personnel, Peace-keeping Mission.


0

2

4

6

8

0

200

400

600

800

1/02/90 11/02/93 9/02/97 7/03/01

Attacks Cumulative

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50

100

150

200

250

0

1000

2000

3000

4000

5000

6000

1/02/90 11/02/93 9/02/97 7/03/01

Injured Cumulative

0

10

20

30

40

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200

400

600

800

1000

1200

1400

1/02/90 11/02/93 9/02/97 7/03/01

Killed Cumulative

0.0

0.5

1.0

1.5

2.0

2.5

3.0

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20

40

60

80

100

1/02/90 11/02/93 9/02/97 7/03/01

Suicide Cumulative

Figure 1. Terror Attacks, Victims Injured, Victims Killed and Suicide Attacks

September 27, 2000 -----> September 27, 2000 ----->

September 27, 2000 -----> September 27, 2000 ----->






Description of the Data

1. From previous research, we have a complete data set of terror attacks in Israel, including all the characteristics of each attack (date, time, number of casualties, location, type of attack and type of target.

2. Using the dates of the attacks, in 2002, we collected all the articles covering them in the 3 major newspapers in Israel (Yedioth Ahronoth, Ma’ariv and Ha’aretz) and the main economic newspaper, Globes.

3. We estimated the cost of publishing (the opportunity cost) each of the articles in each of the newspapers, considering the size of the text, the page, the size of the headline and the inclusion of pictures.


Newspaper Articles Covering Terror Attacks in Israel - 2002

0

100

200

300

400

500

600

700

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Defensive Shield


Opportunity Cost of Newspaper Articles Covering Terror Attacks in Israel - 2002

(N.I.S.)

0

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000



Number of Suicide Attacks in Israel - 2002

0

1

2

3

4

5

6

7



Summary Statistics

AttacksGreen Line

InjuredKilledSuicide

Total 2002166562,06643743

Terrorism

ArticlesFront Page

PictureTitleOpportunity Cost - million

N.I.S.

Total 20023,0454662,441981249.8*

490.4**

Media

* Only text** Including picture and titles


Preparation of the Data

To perform a valid statistical analysis and to test interesting hypotheses we constructed weekly observations from the disaggregated data collected for each attack.


Summary Statistics - Terrorism (Weekly Observations – 2002)

AttacksGreen Line

InjuredKilledSuicide

Mean 3.2 1.1 39.7 8.4 0.8

Maximum 11 5250 58 5


Summary Statistics - Media (Weekly Observations – 2002)

ArticlesFront Page

PictureHead line

Opportunity Cost - million

N.I.S.

Mean 67.0 10.1 53.121.35.4*

Max 189 27 165 6416.3*

* Only text


Opportunity Cost by Terror Attacks (Weekly Observations – 2002)

0

5

10

15

20

0 2 4 6 8 10 12Attacks

MillionN.I.S.

β = 1.3 t = 6.5


Opportunity Cost by Attacks Within the Green Line

(Weekly Observations – 2002)

Suicide

MillionN.I.S.

0

5

10

15

20

0 2 4 6

β = 2.4 t = 6.0


Opportunity Cost by Number of Injured (Weekly Observations – 2002)

Injured

MillionN.I.S.

0

5

10

15

20

0 100 200 300

β = 0.04 t = 5.2


Opportunity Cost by Number of Killed (Weekly Observations – 2002)

Killed

MillionN.I.S.

0

5

10

15

20

0 20 40 60

β = 0.3 t = 7.6


Opportunity Cost by Suicide Attacks (Weekly Observations – 2002)

Suicide

MillionN.I.S.

0

5

10

15

20

0 2 4 6

β = 2.0 t = 4.1


A Peek into the Editor’s Office

How Does the Editor Decide What to Print?


A Peek into the Editor’s OfficeThe marginal impact of terror attacks’ attributes

on publication characteristics (t statistics in parenthesis) Front Page

ArticlesPicturesLarge

Headlines

Attacks2.6(8.0)

15.4(8.4)

4.3(5.1)

Green Line 4.2(5.8)

25.8(6.3)

7.2(4.2)

Injured0.07(5.1)

0.5(5.4)

0.1(3.2)

Killed0.5(6.5)

3.4(11.6)

0.9(5.3)

Suicide 3.4(3.8)

23.0(4.7)

4.8(2.3)


-6

-4

-2

0

2

4

The Impact of the Media on the Stock Market in Israel Controlling for the US Market

Opportunity Cost

TA100% Change


Conclusions The media acts like a silent partner to terrorism. Media coverage is a key channel by which

terrorism produces economic damage The economic damage caused increases

monotonically with the amount media coverage.

For a given terror attack, the greater its media coverage, the greater the economic damage caused.

We found that the impact of the media coverage of terrorism on the economy decreased over time.


Dilemma The media benefits from terrorism – more newspapers are sold.

It seems plausible that the media magnifies terrorism’s impact on the economy.

It seems plausible that the impact of terrorism can be diminished by reducing media coverage.

DILEMMA

Is there a democratic way of coordinating media coverage in a free and competitive society?

Government & Nonprofit

סיקורי הטרור במדיה- ניו יורק