Abstract
Using two sources of household data, we show that in response to psychological distress induced by terrorist attacks, households significantly reduce their trading activity and equity ownership, are less likely to enter the market, and increase the value of their savings accounts. We find that the effects of attacks are stronger in months with more casualties and increased news coverage, as well in households with a male head and in those located in the same state as the attack. Further tests on security selection suggest that our findings are consistent with risk shifting and inattention as implied by an anxiety-based utility model.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
