How effective is counter-terrorism and what are the underlying mechanisms? Relying on a unique experiment and detailed micro data from Israel, we show that the deployment of the Iron Dome anti-rocket system mitigated the negative effect of rocket attacks on house prices and lowered the price premium associated with in-house shelters. Analysis of surveys and data on purchases of anti-anxiety drugs yields evidence consistent with a psychological mechanism: by reducing the negative effects on daily routine, subjective well-being, and psychological distress, Iron Dome lowered the disamenity associated with living under the shadow of the rocket threat.
Bibliographical noteFunding Information:
We thank the editors, Kenneth Couch and Erdal Tekin, and three anonymous reviewers as well as audiences at the annual meetings of the Israeli Economic Association and of the Israeli Geographical Association, Bank of Israel, The Hebrew University of Jerusalem, NBER Summer Institute, and Tel Aviv University for useful comments. We are grateful to Ofer Cohen from Super-Pharm, Amir Dahan from the Israel Tax Authority, Nurit Dobrin from the Israeli Central Bureau of Statistics, and to Yad2’s CEO Yavin Gill-More for providing data, and to Adi Ben-Nun from the GIS lab at The Hebrew University of Jerusalem for his help with the maps. Financial support for this project was generously provided by the I-Core Program of the Planning and Budgeting Committee at the Israel Science Foundation (grant no. 1821/12) and by the Sapir Economic Policy Forum. The views expressed in this paper are those of the authors and do not necessarily reflect the position of the Bank of Israel. Yael Elster is a Fulbright Fellow 2018/2019. This paper is based on the second chapter of her PhD dissertation at The Hebrew University of Jerusalem.
© 2019 by the Association for Public Policy Analysis and Management
ASJC Scopus subject areas
- General Business, Management and Accounting
- Sociology and Political Science
- Public Administration