The Cost of Living and Terror: Does Consumer Price Volatility Fuel Terrorism?

Abstract

Do fluctuations of consumer prices prompt terrorist activity? A latent assumption among conflict scholars is that price volatilities for basic consumer goods produce hardships for people that increase popular grievances, damage government legitimacy, and raise the chances for terrorism. In this study, I use a series of regression estimations to test volatility in consumer price indices for energy, housing, and foods as predictors of domestic and transnational terrorism in a cross section of countries. I produce several findings. First, food price fluctuations are significant predictors of multiple measures of terrorism, while energy and housing prices are not. Second, rapid food price increases, not decreases, promote terrorist attacks. Third, the relationship between food price volatility and terrorism is most consistently present in nondemocratic and “hybrid” political regimes and in medium human development countries rather than in democracies or in countries characterized by very high or very low economic development.