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Terror and Tourism: The Economic Consequences of Media Coverage

Terror and Tourism: The Economic Consequences of Media Coverage

449/2019 Timothy Besley, Thiemo Fetzer and Hannes Mueller
political economy, working papers

449/2019 Timothy Besley, Thiemo Fetzer and Hannes Mueller

This paper studies the economic effects of news-coverage of violent events. To do so, we combine monthly aggregated and anonymized credit card data on tourism spending from 114 origin countries and 5 tourist destinations (Turkey,Egypt, Tunisia, Israel and Morocco) with a large corpus of more than 446 thousand newspaper articles covering news on the 5 destination countries from a subset of 57 tourist origin countries. We document that violent events in a destination are followed by sharp spikes in negative reporting at origin and contractions in tourist activity. Media coverage of violence has a large independent effect on tourists pending beyond what can be accounted for by controlling for the incidence of violence. We develop a model in which tourist beliefs, actual violence and media reporting are modelled together. This model allows us to quantify the effect of violent events and reporting.

Political Economy