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How does the terrorist experience alter consumer behaviour? An analysis of the Spanish case
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How does the terrorist experience alter consumer behaviour? An analysis of the Spanish case☆ Thomas Baumert, María Mercedes de Obesso, Esther Valbuena
⁎
ESIC Business & Marketing School, Avenida de Valdenigrales s/n, Pozuelo de Alarcón, 28223 Madrid, Spain
ARTICLE INFO
ABSTRACT
Keywords: Terrorism Consumer behaviour Traumatic experience Emotional response
Although the number of terrorist casualties has recently decreased, terrorism still presents a threat to society. Within the last 20 years there has been a significant increase in the number of monographic studies about terrorist incidents’ impact on consumer behaviour. However, the present study is the first to analyse whether a terrorist threat specifically alters the consumer behaviour of direct victims. According to the literature, the impact of terrorism on many sectors is lower than originally expected and, if significant, only short term. We hypothesize that this influence is more significant and lasts longer with direct victims, who have undergone traumatic experience. For this purpose, we explore how victims of terrorism in Spain respond to hypothetical scenarios describing a terrorist plot against airplanes at an international airport. In addition, we check if there are significant differences between participants when confronted with situations in which they have to opt between taking or cancelling a planned trip by plane under the menace of a (hypothetical) terrorist attack.
1. Introduction After the events of 9/11, which convulsed the Western world, policymakers started worrying about the economic consequences of terrorism (Neumayer, 2004:262). Accordingly, academics soon began analysing both the macro- and micro-economic effects that might derive from those attacks, later generalising them to other scenarios and sectors. Since then, studies regarding the economic repercussion of terrorism—both from the input (terrorist financing)1 and output (economic consequences of terrorism) sides2—have gained broad attention not only from scholars and policymakers but also from the media in general, spreading the main results to all levels of society. Hence, although in the aftermath, the economic repercussions of the 9/11 attacks still tended to be broadly overestimated, nearly two decades of
monographic studies have allowed us to obtain a sharper image about how terrorist actions affect the economy. Today’s markets, however, are composed of more aware consumers whose decisions are less influenced by an irrational fear of a terrorist threat. Although during 2017, the number of deaths due to terrorist incidents decreased worldwide 27% in comparison to the previous year (18,814 casualties) and decreased by 75% in Europe, the estimated global economic impact of terrorism still amounted to a minimum of $52 billion (Index, 2018). Hence, understanding the emotional mechanism through which the threat—and, more so, the direct personal experience—of terrorism might alter consumer behaviour is still a critical matter, especially as the perceived relevance of a terrorist threat in consumer decisions still differs significantly between business managers and customers, as has been pointed out specifically in the tourism and
☆ This research was partially supported by the United States Department of Homeland Security through the Center for Risk and Economic Analysis of Terrorism Events (CREATE) under grant number 2007-ST-061-000001 under the direction of Prof. David J. Weiss (California State University). However, any opinions, findings, conclusions, or recommendations in this document are those of the authors and do not necessarily reflect views of the United States Department of Homeland Security. The authors would like to express their gratitude towards the Spanish Association of Victims of Terrorism (AVT) for their support and participation in the research project and Prof. Mikel Buesa (Complutense University, Madrid) for his help and advice. ⁎ Corresponding author. E-mail addresses: [email protected] (T. Baumert), [email protected] (M.M. de Obesso), [email protected] (E. Valbuena). 1 Taking only into account the books on the subject, as including single articles would exceed the extent of this work, we cite Adams (1986), Ehrenfeld (2005), Napoleoni (2004), Giraldo and Trinkunas (2007), Taylor (2007), Bierstecker and Eckert (2008), Hinojosa (2008), Pieth et al. (2009), Odeh (2010) and D’Souza (2011). 2 Leaving aside the numerous articles, we point out the following monographs: Frey (2004), Suder (2004, 2007), Enders and Sandler (2006), Richardson et al. (2005, 2007, 2009), Costigan and Gold (2007), Brück (2007), Krueger (2007), Keefer and Loayza (2008) and Buesa and Baumert (2010); also, although with a broader scope, Silke (2018).
https://doi.org/10.1016/j.jbusres.2019.11.085 Received 18 June 2019; Received in revised form 28 November 2019; Accepted 29 November 2019 0148-2963/ © 2019 Elsevier Inc. All rights reserved.
Please cite this article as: Thomas Baumert, María Mercedes de Obesso and Esther Valbuena, Journal of Business Research, https://doi.org/10.1016/j.jbusres.2019.11.085
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hospitality sector (Atkins, Chew, Gschwind, & Parker, 2003; Pizam, 2010) and, more recently, in the travel industry (Business Traveller, 2017)—the sectors the present study considers.3 The starting point for this study is the definition of terrorism as a sort of asymmetric economic war aimed to economically and psychologically erode its opponent (Bates & LaBrecque, 2019; Baumert, 2008, 2010; Buesa, 2010). Thus, terrorists will first select those objectives that imply a major economic impact and then those that allow their message to be spread through international media coverage. As shown later, the role of media is fundamental and has been incorporated into our model. The previous definition fits the context of terrorism as a ‘predatory war model’, as presented by Buesa (2010). In other words, from an economist’s point of view, terrorism might be understood as a form of political action, exerted by a certain organisation, consisting of the systematic use of violence against people and property as a means of achieving the public’s support for their cause, not by ideological persuasion but through fear; the terrorist’s final goal is to undermine the will of citizens and the state until they are forced to accept the terrorist’s demands (Buesa & Baumert, 2018). To meet these aims, terrorists try to influence customer behaviour through fear as a mechanism for magnifying the repercussion of their attacks. Thus, for example, in the case of 9/11—without doubt, the most iconic single terrorist incident of the present century—it seems clear that Al-Qaeda soon realised the economic dimension of the attacks against the World Trade Center as an action aimed precisely at the financial core of the U.S. economy, being well aware not only of its psychological impact to the world but also of its economic repercussions for the U.S. In this sense, it might be worth remembering an original speech by Osama Bin Laden recorded three years after 9/11:
significant effect on aggregate demand. It is only through a persistent terrorist campaign that lasting economic damage might be inflicted.7 However, in this increasingly complete image of how terrorist incidents might affect an economy, little effort has been made so far, to the best of our knowledge, to determine the precise mechanism through which terrorist threats impact individual consumer behaviour. Accordingly, the present article, which represents the second stage of an international study on the emotional and behavioural responses to a terrorist threat (of which an overview of the results is given in the next section), analyses to what degree—if at all—the immediate experience of terrorism (i.e. being the victim of a terrorist attack) significantly alters consumer behaviour. The conclusions obtained hold potential for a better understanding of risk perception and its impact on consumer behaviour—and, thus, for the marketing departments of the products and services affected—in periods of uncertainty and fear such as those following major terrorist attacks. Although, to the best of our knowledge, no study has tried to measure the possible effect of a terrorist attack on consumer behaviour, taking as a sample real victims (i.e. people who have survived a terrorist attack), there have been several works that have centred their attention on how a terrorist threat might alter consumption habits, which are reviewed in the next section. The present study aims to complement this literature—the main result of which is that a terrorist threat, if it has an effect at all, only has a short-term impact (i.e. it is capable of altering consumer behaviour only in the short term), thus only marginally influencing the affected region’s economic growth—by testing whether terrorist attacks are capable of altering the consumer behaviour of victims in the long term. In other words, the study examines whether the traumatic experience of having directly suffered a terrorist attack alters consumption decisions more significantly than a mere terrorist threat. If not, it might be concluded that terrorists’ strategy of conceiving attacks as a means to economically erode their opponents is based on a crucial theoretical misconception, as people’s resilience would be stronger than fear. This would also imply that, under certain circumstances, even a short-term effect in the tourism, travel, and hospitality sector might be mitigated by positive incentives such as allowing changes in flight and accommodation dates or upgrades for free (cf. Hajibaba, Boztuğ, & Dolnicar, 2016).
We [Al-Qaeda] are continuing this policy in bleeding America to the point of bankruptcy […] We, alongside the mujahedeen […] using guerrilla warfare and the war of attrition […], bled Russia for ten years until it went bankrupt and was forced to withdraw in defeat […] Every dollar of al Qaeda defeated a million dollars, by the permission of Allah, besides the loss of a huge number of jobs […]. As for the economic deficit, it has reached record astronomical numbers estimated to total more than a trillion dollars. […] And it all shows that the real loser […] is the American people and their economy.4
2. An overview of previous studies Shortly after the attacks on the Twin Towers and the Pentagon, Nobel laureate Klein and Ozmucur (2002) published a research article in which they observed a shift in the pattern of consumption within the U.S. as a result of 9/11. More complex, and relevant for the purposes of our study, is the work by Choi, Kwon, and Lee (2007), who adopted terror management theory to explore how people’s materialistic consumption behaviours can be influenced by traumatic social events such as 9/11. Using survey data from a representative sample of the U.S. adult population, they examined the influence of mortality salience on two consumption behaviours—brand name consumption and compulsive consumption—concluding that people with a greater fear of becoming a terrorism victim also show a greater tendency for brand name consumption and compulsive consumption. These results agree with those previously obtained by Mandel and Heine (1999). For their part, Dube and Black (2010) evaluated differences in consumer perception
When studying the economic impact of terrorism, it is necessary to distinguish between two main cases: (a) single or isolated terrorist incidents of a certain magnitude (e.g. 9/11, the Madrid, London, Mumbai and—to a lesser extent—Boston bombings and the more recent attacks in Paris, Nice, Berlin, and Barcelona) and (b) countries or regions that suffer terrorist attacks, even if on a smaller scale, continuously during an extended time period (e.g. Ireland, Spain, Israel, Columbia, and Turkey). Usually the former is related to transnational terrorism with an Islamic background, such as Al-Qaeda and ISIS,5 whereas the latter is linked to nationalist/separatist groups (e.g. IRA, ETA, and PKK) or to politically oriented (mostly left-wing) terrorists, such as the Colombian FARC.6 Although single attacks of a great magnitude might have an important direct economic impact, only rarely will they have a 3
For a recent theoretical discussion on the impact of terrorism on the tourist sector, see Naumann, Edmonds, and Frear (2018). 4 http://edition.cnn.com/2004/WORLD/meast/11/01/binladen.tape/ [accessed January 14, 2019]. 5 ISIS could belong to either category, depending on whether they are acting outside of or within the borders of the territory they control. 6 These categories are not exclusive, as ETA not only vindicates an independent Basque Country but also a Marxist-Leninist-oriented one. Similarly, the terrorist attacks suffered by Israel might not only have a nationalist but also a religious motivation.
7 As shown, for the Spanish case, by Abadie and Gardeazabal (2003), among others. Some authors argue that even the 2008 crisis was ultimately the result of 9/11, as the FED’s decision (supported by the European and Japanese central banks) to guarantee unlimited market liquidity in the aftermath of those attacks set, through an excess of cheap money, the basis for the subprime crisis. However, even if a certain connectivity between events seems plausible, it is obvious that Al-Qaeda had not foreseen that reaction, so it should not be considered to have had any effect as a result of the attacks against the Twin Towers and the Pentagon (cf. Buesa & Baumert, 2018).
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before and after terrorist incidents such as 9/11, finding significant differences in consumer ethnocentrism, patriotism, time management, and attitude towards the regulation of businesses and product quality following a terrorist attack, factors that then impact consumer purchase decisions. However, the authors did not analyse whether these effects are lasting.8 Herzenstein, Horsky, and Posavac (2015) conducted three studies with diverse methodologies and populations to explore how concerns with terrorism affect individuals’ behaviour. Two studies were conducted in Israel, showing that concerns of frequent terrorism increase people’s desire for control and may lead to avoidant behaviours. The extent of the avoidance response depends on consumers’ perceptions of whether they have some control over the odds of becoming a victim of a terror attack. When individuals perceive their control to be low, they exhibit more avoidant behaviour, changing their preferences and consumptions. The authors further found that individuals’ desire for control increases when they are primed for terrorist activities (compared with when they are prime for general mortality). The Israeli experience is of relevance, as residents of that country—unlike those of the U.S.9 but similar to those of Spain, where our experiment takes place—have long experience with terrorism and thus might be more aware of a permanent risk than those from other countries in which attacks occur less frequently. Accordingly, in times of high risk perception of a terrorist attack, people might shift from buying in stores or malls to online shopping as a safer alternative (cf. Predmore, Rovenpor, Manduley, & Radin, 2007). Similarly, Rew and Minor (2018) explored the role of consumer resilience and its effect on the relationship between corporate social responsibility (CSR) and consumer attitude by exposing the subjects of their study to (hypothetical) news of a traumatic incident, such as a terrorist attack or gun violence. They found that CSR has a positive association with consumer attitudes and resilience and, probably even more importantly, that consumer resilience helps in improving attitudes (consumer attitudes are affected according to the level of resilience). Finally, there are several studies worth pointing out, as they examine the effects of the terrorist threat on travel intentions, specifically in the same context as that of the experiments presented in the present paper.10 In the first, Floyd, Gibson, Pennington-Gray, and Thapa (2004) examined the relationship between perceived risk and travel intentions among residents in the New York City area.11 The timing of the survey (November 2001) provided the opportunity to evaluate the effect of perceived risk on travel intentions during the aftershock following September 11, 2001. The study found that intentions to take a pleasure trip in the next twelve months (at the time of the survey) were related to safety concerns, perceived social risk, travel experience, and income. For their part, Seabra, Abrantes, and Kastenholz (2014), by applying a structural equation model to a sample of 600 international tourists travelling in Portugal, Spain, and Italy, concluded that tourists are motivated to acquire information about terrorism in the media, revealing the attention given to news regarding this topic, which in turn directly influences their risk perception. This risk perception also directly influences tourists’ involvement in trip planning, specifically
information-seeking before and during a trip. Liu and Pratt (2017), following a resilience approach similar to that of Rew and Minor (2018), found no long-term effect of terrorism on international tourism demand and observed a short-term effect that is quite limited from a global perspective using panel data models. Out of 95 countries, only nine face a long-term impact of terrorism on tourism and 25 show a short-term impact using time series models, implying that international tourism is resilient to terrorism. The influence of terrorism is susceptible to political instability, income levels, and tourism intensities. Recently, Corbet, O’Connell, Efthymiou, Guiomard, and Lucey (2019) estimated the influence of terrorist attacks on European tourism through the short-term post hoc response of the airline industry and passengers, applying seasonally adjusted ARMA-GARCH methodology datasets that examine changes in tourism as measured by available seat kilometres, seats filled, and changes in fares and revenues. They found that traffic flows fell substantially in most cases studied despite significant fare reductions; however, the reductions varied substantially based on the flight origin and ticket type purchased. It could be possible for companies to prevent cancelations by following an approach similar to that of the hospitality sector, in which, according to Hajibaba et al. (2016), certain preventative actions seem to reduce cancelations—the most effective being a change of accommodation, especially when combined with an upgrade, followed by information updates and, finally, the provision of security devices or security staff. However, the number of studies that have examined how terrorist attacks affect consumer behaviour is still quite low, even when including those from psychology and not just from the field of business studies. Among these, although they make comparisons between countries accustomed to terrorist threats (such as Israel) and others less so (such as the U.S.), none seem to specifically observe possible changes in the consumption patterns of the victims of such attacks. 3. Design of the experiment12 In the present study, we explore how victims (compared with nonvictims) of terrorism in Spain respond emotionally and behaviourally to hypothetical scenarios describing a terrorist plot against airplanes at an international airport (see Box 1). The respondents were asked to imagine having already planned a flight when news of an impending attack surfaces. The reports were ascribed to NBC News and CNN. The attackers were armed with man-portable air defence systems (MANPADS): mobile shoulder-fired missiles that can be carried by one man and set near an airport. The participants were told that the weapons were distributed by the U.S. to Afghans fighting the Russians during the 1980s, but several thousand remained unaccounted for. The fictional account also added that according to an intercepted email, 300 MANPADS had been shipped to the target country. The terrorists had mapped out potential launch locations near the airport. Although we assured participants that the scenarios were fictional, the verisimilitude of the accounts was inescapable. To generate predictions of how the reports would affect behaviour, we employed factorial forecasting (Weiss, 2012), a methodology based on functional measurement. Embedded in the scenarios were factorially manipulated variables reporting the response of the government and recent trends in passenger load. We anticipated that how well the authorities were coping with the plot would influence how much fear people felt. The behaviour of other passengers was expected to serve as a social norm: ‘if my peers are reluctant to fly, perhaps I should be, as well’. These two aspects were our between-subject factors; to maintain realism, a respondent was exposed to only one combination of government reaction and passenger load. The nested structure avoids
8 Sigirci, Rockmore, and Wansink (2016) published the results of their research under the title ‘How traumatic violence permanently changes shopping behaviour’. However, the article was later retracted by the journal’s editors, as they found that the raw data did not support the conclusions of the article (Frontiers Editorial Office, 2017). 9 For a comparison between consumer reactions in the U.S. and Israel regarding terrorist threats, see Marcus and Shekter-Porat (2001). 10 We do not review empirical works that measure the economic impact of terrorist threats on the tourism and travel sector from an aggregated (i.e. macroeconomic) perspective, an overview of which can be found in Baumert (2016). 11 Previously, Blalock, Kadiyali, and Simon (2007) studied the impact of post9/11 airport security measures on the demand for air travel.
12 The description of the experiment’s design is taken from Weiss et al. (2016).
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Box 1 The basic incident. ‘NBC News has reported that an international terrorist organisation is planning to use man-portable air defence systems (MANPADS) to cripple the airline industry. Intelligence reports suggest the uncovered plot was in the advanced stages of planning. The terrorists had mapped out launch locations within a couple of miles of airports. These locations are believed to have been selected because they allow shooters to simply drive to a good vantage point and avoid airport security altogether. Sources also confirm that an email was recently intercepted asserting that 300 MANPADS have been shipped from Iran to the U.S. There is currently no technology installed within aircrafts to counter the missiles’. Source: Own elaboration. 4. A summary of the results from the first stage of the study The first stage of our study consists of two bi-national experiments regarding emotional and behavioural responses to a terrorist plot against commercial flights, examining both feelings and projected action (Weiss et al., 2016). The research employed hypothetical scenarios in which terrorists attacked airplanes with shoulder-fired missiles as they were landing or taking off from an international airport. The scenarios were built around two factorially crossed manipulated variables, each with three levels: (1) government announcements or actions and (2) social norms, expressed as variations in airline ticket sales. Each respondent was given a questionnaire containing only one of the nine scenarios. Experiment 1 was conducted in Spain and California (n = 360, 50% female) and Experiment 2 in Israel and California (n = 504, 50% female). Participants in Experiment 1 expressed only a moderate degree of fear (cell means were 5–7 on a 10-point scale), and our manipulated factors did not control that fear in the expected way. It is possible that the levels were interpreted differently. For example, to some respondents, foiling the plot might constitute evidence that the threat is real, whereas evaluating facilitates the belief that there is no true threat. People are less likely to fly for a vacation than a wedding or job interview. However, in comparison with California, men in Spain are more likely to go ahead with the vacation flight. In both studies, fear and flight plans were not differentially affected by governmental response or social norms, and, overall, women expressed more fear than men. In addition, Experiment 1 examined the purpose of the trip. Most respondents would not change a planned flight to attend a close friend’s wedding or important job interview, but a substantial number would postpone a vacation or drive to a different location. Experiment 2 featured escalating attacks. In each case, a passenger airplane was fired upon by Al-Qaeda (in the U.S.) or Hezbollah (in Israel) operatives as it was flying near the airport. Next, the attacks became more effective, causing successively greater death and destruction. In the first attack, there were no deaths and only 15 of the 146 passengers incurred minor injuries. In the second attack, a week later, all 382 passengers and 15 crew members were killed. In the third attack, another week later, two planes (one arriving and one departing) were shot down, with all passengers and crew members killed. This escalation yielded increased fear and more cancelled trips. Curiously, within both studies, responses were similar across countries despite national differences in direct experience with terrorism. Because Israel and Spain have been under siege for many years, we expected that residents might have become inured to the threat of terrorism. However, our results suggest that this is not the case: Levels of fear were comparable in the three countries. Perhaps more tellingly, within Israel, direct exposure to missile fire did not influence fear. We
Fig. 1. Overview of different possible scenarios. Source: Own elaboration.
potential contrasting effects that might arise if the respondent were to compare levels of the manipulated variables (Weiss et al., 2016). The nine between-subject conditions were defined by crossing three levels of government response (Fig. 1)—(1) ‘Because this is a serious threat and we have no leads, we will close the airport for three days’ (Serious threat); (2) ‘We have some leads and are evaluating security; the public is asked to be vigilant’ (Evaluating); and (3) ‘The ringleaders have been arrested, MANPADS have been confiscated, and we recommend business as usual’ (Plot foiled)—with three levels of social norms—(1) ‘Despite price cuts, air ticket sales have decreased by 40%’ (Sales down); (2) ‘Despite a price cut, ticket sales have remained steady’ (No change); and (3) ‘With a price cut, ticket sales have increased by 20%’ (Sales up). Box 2 shows one of the nine possible scenarios. Our study included within-subject factors as well, focused on the nature of the planned trip (see Box 3). A person might normally be quite reluctant to fly but will do so under exigent circumstances such as a family emergency. The expectation was that people would be more willing to accept the risk to go to an event that could not be easily rescheduled, such as a wedding, than one that could be postponed, such as a job interview or vacation. The possible responses to the questions related to these scenarios were the following codified choices: (1) very unlikely, (2) unlikely, (3) somewhat unlikely, (4) somewhat likely, (5) likely, and (6) very likely. We anticipated that government reaction and social norms would combine additively. The import of additivity is that the factors combine independently, which means that compensation is feasible. For example, strong reassurance by the government might be able to overcome the adverse effect on flying generated by a social norm that discourages passengers.
Box 2 Combination 2,1 (one of nine possible combinations). ‘Following the NBC News story, a Department of Homeland Security spokesperson said that MANPADs represent a serious threat. He noted that, at this time, they have no strong leads regarding the ringleaders or the locations of the MANPADS. The department has decided to close down the airport for the next three days to evaluate security in the surrounding vicinity. CNN just reported that during the two weeks since the story broke, major airlines have announced a ticket price cut, and sales have remained steady’. Source: Own elaboration. 4
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Box 3 Within-subject factors. (1) Within one month of the media report, you were planning to fly to your best friend’s wedding 1,500 miles away. You and this friend have shared every major life event together in the past and have promised each other to continue to do so in the future. What would you do about your plans to attend the wedding? (2) Within one month after the media report, you were planning to fly to attend a job interview 1,500 miles away. You have been awaiting such an opportunity for several years. This position would not only double your current salary but would bring you several steps closer to your lifelong career goal. (3) Within one month after the media report, you were planning to fly to go on a leisure vacation with friends and family to a place 1,500 miles away. You have been wanting to take this particular trip for several years. You finally have the opportunity and finances to go after saving for over a year. Also, you have devoted a great deal of time researching the area to create an exciting agenda during your stay. Source: Own elaboration. conclude that a nation’s historical record of terrorism has little impact on its people’s anticipated reactions to a novel threat.
Fig. 4 shows the results obtained regarding the within-subject factors. As can be seen, more than 70% victims of terrorism would not alter their planned trip to either a best friend’s wedding or an important job interview. However, this drops to 56% in the case of vacations, probably because it is easier to change the date of a trip or the destination. Thus, the victims’ reaction can be considered very rational. However, the victims present a higher propensity not to take the planned trip or to shift to a different means of transportation than the non-victims (first stage of the study), especially in the case of a wedding, and slightly less so in the case of a job interview. No differences appear in the case of a vacation, in which both groups present very similar results.15 Thus, it becomes evident that having suffered a terrorist attack makes people perceive a higher level of fear when confronted with the possibility of a new attack and increases their sensitivity to the two factors we manipulated in our experiment. It also makes them more cautious and thus more inclined to opt for alternative transportation choices but not to cancel their plans. Thus, terrorism can shift consumer behaviour under certain circumstances, especially when terrorist incidents are not just a threat but an experience; however, because it represents a zero-sum game from an aggregated point of view, it has no effect on the economy as such. However, it seems appropriate to handle the obtained results with a degree of caution, especially when extrapolating and generalising them, as the particular characteristics of the sample introduced some biases that cannot be completely ruled out. For example, the victims of terrorism belonging to the AVT—nearly all victims of separatist terrorist groups—include many members who, prior to the attacks, were members of the Spanish Army, police, or Civil Guard, for whom the question about the job interview might be less realistic than the other two options (wedding and vacation). Furthermore, the sample size should be broadened to reduce the margin of error. In addition, a larger sample would allow the obtained results to be more finely tuned, for example, by considering not just the group’s average values but taking into account how much time has passed since they suffered the attack. However, despite these limitations, we believe the results obtained are still of notable relevance, both for the field of economic psychology and for business agents, and facilitate further broadening of the study scope by its replication in other countries.
5. Does having suffered a terrorist attack alter the victim’s consuming behaviour? In addition to the results obtained in the first stage of the research project, in a second stage, we sought to determine whether not just fearing an attack but having already suffered one—shifting from the mere possibility to a traumatic reality—may imply a more adverse emotional and behavioural response to our experiment (hypothetical scenarios describing a terrorist plot against airplanes at the nearby international airport they are likely to use). To run this experiment, we benefited from the fact that most of the victims of terrorism in Spain, legally recognised as such,13 are members of the Association of Victims of Terrorism (AVT).14 After having obtained the permission of the AVT to contact their members, we did so by email, sending them the contact details and access to the online questionnaire. Out of approximately 4,400 members of the AVT—that is, nearly all the surviving victims—we obtained 93 valid responses. Although at first glance it might be argued that the size of our sample (n = 93) is quite small, it should be borne in mind that adequate sample size depends on the homogeneousness of the distribution and the size of the analysed universe; as the latter is N = 4,400, our sample, despite its small magnitude, exceeds by 50% the minimum necessary size for inferring statistically significant results with a margin of error of 10%, the standard value in the field of economic psychology, to which the present study is ascribed. As can be observed in Fig. 2, the overall results are coherent with the exception of the plot foiled case, in which both the Tickets sales increased” and “Tickets sales remain steady” present higher values than expected. However, in comparison to the non-victims, the obtained results are much closer to the ones anticipated according to theory, than those obtained in the Californian sample, where factor manipulation did not produce the expected reaction (Weiss et al., 2016). What is more relevant is that the mean values in each cell for the victims (values ranging between 6 and 9) are much higher than those for the nonvictims (4 to 6,5) at a statistically significant level of 95% (Fig. 3), and the gap between the perceived fear of victims and non-victims increases the more likely the plot becomes. It is worth noting that this gap remains when compared with other non-victims from California (cf. Weiss et al., 2016).
6. Conclusions Although the number of terrorist casualties has recently decreased, terrorism still presents a major threat to society and to the world economy. The past decades have seen an important increase in the number of monographic studies about the economic impact of terrorism, allowing for a better understanding of the economic repercussions of the phenomenon.
13 In accordance with Law 29/2011 of 22 September 2011 on the recognition and integral protection to victims of acts of terrorism. 14 The Asociación Víctimas del Terrorismo (AVT) is a not-for-profit, private entity formed in February 1981 to assist the victims of terrorism in a moment when they suffered the consequences of institutional disregard and the marginalisation of many sectors of the Spanish society. The AVT currently represents around 4,400 victims of terrorism in Spain of more than seven different terrorist organisations and holds offices in several Spanish cities to help victims all over the Spanish territory.
15 Unfortunately, a direct numerical comparison with the group of non-victims is not possible, as the possible answers of the Californian sample and of the group of Spanish non-victims were codified slightly differently.
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9.5 9 8.5 8 7.5 7 6.5 6 5.5 5 PLOT FOILED
Ticket sales increased
PLOT BEING EVALUATED
Ticket sales remained steady
STRONG PLOT
Ticket sales decreased
X-axis: perceived fear; Y-axis: risk level Fig. 2. Results for victims (Spain). X-axis: perceived fear; Y-axis: risk level. Source: Own elaboration.
7 6.5 6 5.5 5 4.5 4 3.5 3 2.5 2 PLOT FOILED
Ticket sales increased
PLOT BEING EVALUATED
Ticket sales remained steady
STRONG PLOT
Ticket sales decreased
X-axis: perceived fear; Y-axis: risk level. Fig. 3. Results for non-victims (Spain). X-axis: perceived fear; Y-axis: risk level. Source: Own elaboration.
In this context, the present study is the first attempt to analyse how a terrorist threat alters consumer behaviour and how a terrorist experience (i.e. having suffered and survived a terrorist attack) might affect people’s consumption decisions. For this purpose, we explore how victims (in comparison to non-victims) of terrorism in Spain respond emotionally and behaviourally to hypothetical scenarios describing a terrorist plot against airplanes at the nearby international airport. In addition, we also check if there are significant differences between them when confronted with having to choose whether to take a flight to attend a best friend’s wedding, an important job interview or for a vacation under the threat of an imminent terrorist attack. Our findings show that having suffered a terrorist attack makes people perceive a higher level of fear when confronting the possibility of a new attack and increases their sensitivity to the two factors we manipulated in our experiment (i.e. government response and public reaction). At the same
time, it also makes them more cautious and thus more inclined to opt for alternative consumption choices but not to cancel their plans. Therefore, our results agree with those obtained by the previous studies (e.g. Rew & Minor, 2018) presented in section two, all of which coincide in concluding that a terrorist threat generally only has a short-term impact if at all, thus only altering consumer behaviour—at least in the tourism, travel, and hospitality sector on which the present article focuses—for a brief time. This means that terrorism only marginally affects the attacked region’s economic growth. By analysing whether terrorist attacks might be capable of altering the consumer behaviour of victims in the long term, we went a step further than the previous studies by testing a more thorough hypothesis, namely whether the traumatic experience of having directly suffered a terrorist attack alters consumption decisions more significantly than a mere terrorist threat. Companies acting in the tourism, travel, 6
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25.3
35.2
35.2
30.8 37.4
36.3
2.2 8.8
5.5 5.5
3.3 9.9
15.4
8.8
4.4 6.6
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Fig. 4. How likely is it that you would take a flight with a major airline to attend a…?. Source: Own elaboration.
and hospitality sector should be aware of this crucial fact and react to a terrorist incident, allowing flexibility in changes of flights or accommodation dates and offering free upgrades. The present article started by defining terrorism as an asymmetrical war meant to economically erode opponents. Our results prove that this strategy is based on a critical theoretical misconception, as the victims’ resilience seems to be stronger than their fear. Our results also show that although terrorism can shift consumer behaviour under certain circumstances in the short term, it is not able to make people abandon their plans, as even former victims behave rationally and, despite being more sensitive to the perception of a terrorist risk, they rarely change their plans. It seems that terrorists are condemned to lose the economic war they started.
< https://www.amexglobalbusinesstravel.com/content/uploads/2017/12/ACTETraveler-Behaviour-Study-Threats-Opportunities-How-Global-Events-Are-DrivingChange.pdf > . Choi, J., Kwon, K. N., & Lee, M. (2007). Understanding materialistic consumption: A terror management. Journal of Research for Consumers, 13, 1–19. Corbet, S., O’Connell, J. F., Efthymiou, M., Guiomard, C., & Lucey, B. (2019). The impact of terrorism on European tourism. Annals of Tourism Research, 75, 1–17. Costigan, S., & Gold, D. (2007). Terrornomics. Oxon, New York: Ashgate. D’Souza, J. (2011). Terrorist Financing, Money Laundering, and Tax Evation: Examining the Performance of Financial Intelligence Units. CRC Press. Dube, L. F., & Black, G. S. (2010). Impact of national traumatic events on consumer purchasing. International Journal of Consumer Studies, 34(3), 333–338. Ehrenfeld, R. (2005). Funding evil (updated edition). Chicago: Taylor Trade Publishing. Enders, W., & Sandler, T. (2006). The political economy of terrorism. Cambridge: Cambridge University Press. Floyd, M. F., Gibson, H., Pennington-Gray, L., & Thapa, B. (2004). The effect of risk perceptions on intentions to travel in the aftermath of September 11, 2001. Journal of Travel & Tourism Marketing, 15, 19–38. Frey, B. S. (2004). Dealing with terrorism – Stick or carrot. Edward Elgar. Frontiers Editorial Office (2017). Retraction: How traumatic violence permanently changes shopping behaviour. Frontiers in Psychology.. Giraldo, J. K., & Trinkunas, H. A. (2007). Terrorism financing and state response. A comparative perspective. Stanford University Press. Global Terrorism Index (2018), < http://visionofhumanity.org/app/uploads/2018/12/ Global-Terrorism-Index-2018-1.pdf > . Hajibaba, H., Boztuğ, Y., & Dolnicar, S. (2016). Preventing tourists from cancelling in times of crises. Annals of Tourism Research, 60, 48–62. Herzenstein, M., Horsky, S., & Posavac, S. S. (2015). Living with terrorism or withdrawing in terror: Perceived control and consumer avoidance. Journal of Consumer Behaviour, 14, 228–236. Hinojosa, L. M. (2008). Financiación del terrorismo y las Naciones Unidas. Madrid: Tecnos. Keefer, Ph., & Loayza, N. (2008). Terrorism, economic development, and political openness. Cambridge: Cambridge University Press. Klein, L. R., & Ozmucur, S. (2002). Consumer behaviour under the influence of terrorism within the United States. Journal of Entrepreneurial Finance and Business Ventures, 7(3), 1–16. Krueger, A. (2007). What makes a terrorist: Economics and the roots of terrorism. Princeton & Oxford: Princeton University Press. Liu, A., & Pratt, S. (2017). Tourism's vulnerability and resilience to terrorism. Tourism Management, 60, 404–417. Mandel, N., & Heine, S. J. (1999). Terror management and marketing: He who dies with the most toys wins. Advances in Consumer Research, 26, 527–532. Marcus, A. D., & Shekter-Porat, N. (2001). Living with fear. Money, 30(13), 124. Napoleoni, L. (2004): Terror Inc.: Global Terrorism, London: Penguin. Naumann, A., Edmonds, J. J., & Frear, D. (2018), Terrorism vs. Tourism: How terrorism affects the tourism industry. In Saxena, A., Bacouel-Jentjens, S., Edmonds, J. Global business value innovations. New York: Palgrave. Neumayer, E. (2004). The impact of political violence on tourism. Dynamic econometric estimation in a cross-national panel. Journal of Conflict Resolution, 48(2), 259–281. Odeh, I. A. (2010). Anti-money laundering and combatting terrorist financing for financial institutions. Dorrance Publishing. Pieth, M., Thelasklaf, D., & Ivory, R. (Eds.). (2009). Countering terrorism financing: The Practitioner’s Point of View. Bern: Peter Lang. Pizam, A. (2010). Hotels as tempting targets for terrorism attacks. International Journal of
References Abadie, A., & Gardeazabal, J. (2003). The economic cost of conflict: A case study of the Basque Country. The American Economic Review, 93(1), 113–132. Adams, J. (1986). The financing of terrorism: How the groups that are terrorizing the World Get the Money to Do It. Simon and Schuster. Atkins, B., Chew, J. K. S., Gschwind, D., & Parker, A. (2003). The impact of terrorism on tourism and hospitality business: An online debate by experts in the field. Tourism and Hospitality Research, 4(3), 262–267. Bates, R. A., & LaBrecque, B. (2019). Terrorism as economic warfare: America's risky business. The Journal of Public and Professional Sociology, 11(1), 5. Baumert, T. (2008). Do terrorists play the markets? Or: Can their attacks serve as a source of financing for terrorism? Policing, 2(4), 434–440. Baumert, T. (2010). The impact of terrorism attacks on stock markets. Mikel Buesa and Thomas Baumert: The economic repercussions of terrorism. Oxford: Oxford University Press. Baumert, T. (2016). Terrorismo y turismo: Una revisión de la literatura acerca de la repercusión de los atentados sobre el sector turístico. Información Comercial Española, no, 893, 51–70. Bierstecker, T., & Eckert, S. (2008). Countering the financing of terrorism. London and New York: Routledge. Blalock, G., Kadiyali, V., & Simon, D. (2007). The impact of post-9/11 airport security measures on the demand for air travel. The Journal of Law & Economics, 50(4), 731–755. Brück, T. (Ed.). (2007). The economic analysis of terrorism. London and New York: Routledge. Buesa, M. (2010). War and terrorism. In M. Buesa, & T. Baumert (Eds.). The economic repercussions of terrorism. Oxford & New York: Oxford University Press. Buesa, M., & Baumert, T. (2018). The economic impact of terrorism. In A. Silke (Ed.). The Routledge handbook of terrorism and counter-terrorism. London and New York: Routledge. Buesa, M., & Baumert, T. (Eds.). (2010). The economic repercussions of terrorism. Oxford & New York: Oxford University Press. Business Traveller/ACTE Global (2017), Traveller behaviour: threats & opportunities. How global events are driving change in business travel. Business Traveller.
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T. Baumert, et al. Hospitality Management, 29(1), 1. Predmore, C. E., Rovenpor, J., Manduley, A. R., & Radin, T. (2007). Shopping in an age of terrorism: Consumers weigh the risks associated with online versus in-store purchases. Competitiveness Review: An International Business Journal, 17(3), 170–180. Rew, D., & Minor, M. (2018). Consumer resilience and consumer attitude towards traumatic events. Journal of Customer Behaviour, 17(4), 319–334. Richardson, H., Gordon, P., & Moore, J. (Eds.). (2005). The economic impact of terrorist attacks. Cheltenham, Northampton: Edward Elgar. Richardson, H., Gordon, P., & Moore, J. (Eds.). (2007). The economic consequences of terrorism. Cheltenham, Northampton: Edward Elgar. Richardson, H., Gordon, P., & Moore, J. (Eds.). (2009). Global business and the terrorist threat. Cheltenham, Northampton: Edward Elgar. Seabra, C., Abrantes, J. L., & Kastenholz, E. (2014). The influence of terrorism risk perception on purchases involvement and safety concern of international travellers. Journal of Marketing Management, 30, 874–903. Sigirci, O., Rockmore, M., & Wansink, B. (2016). How traumatic violence permanently changes shopping behaviour. Frontiers Psychology.. https://www.ncbi.nlm.nih.gov/ pubmed/27656152. Silke, A. (2018). The Routledge handbook of terrorism and counter-terrorism. London and New York: Routledge. Suder, G. (Ed.). (2004). Terrorism and the International Business Environment: The SecurityBusiness Nexus. Cheltenham, Northampton: Edward Elgar. Suder, G. (Ed.). (2007). Corporate strategy under international terrorism and adversity. Cheltenham, Northampton: Edward Elgar. Taylor, J. B. (2007). Global financial warriors: The Untold Story of International Finance in the Post-9/11 World. W. Norton & Company. Weiss, D. J., John, R. S., Rosoff, H., Baumert, T., Buesa, M., González Gómez, J., ... Rosenboim, M. (2016). Worth the risk? Terrorism-induced fear of flying. Universitas
Psychologica, 15(3). Weiss, D. J. (2012). ‘The use of factorial forecasting to predict public response. Psicológica, 33, 695–710. Thomas Baumert PhD. is professor of Economics and History at the ESIC Business and Marketing School in Madrid. He obtained his PhD at the Complutense University of Madrid (2006, Honour degree). His main areas of research focus on the economics of innovation, the economics of terrorism, the economic analysis of premial law, and the history of economic thought. Among others, he co-edited the much-acclaimed book La hora de los economistas (Madrid, 2010), and, together with Mikel Buesa The Economic Repercussions of Terrorism (Oxford, 2010) and Juan Velarde: testigo del gran cambio (Madrid, 2016). He has edited Heinrich von Stackelberg in Spain (Madrid, forthcoming) and is currently working on a biography of this noted German economist. Email: [email protected] María de las Mercedes de Obesso PhD. is Professor of Business at the ESIC Business and Marketing School in Madrid (Spain) and Director of Quality Undergraduate Area. Her research areas include, qualty control, balanced scorecard, the economics of terrorism, especially on the impact of terrorist attacks, the economic analysis of premial law. Email: [email protected] Esther Valbuena PhD. is Professor of Law at the ESIC Business and Marketing School in Madrid (Spain) and Director of the Humanities and Law Departament. Her research areas include the economics of terrorism, especially on the impact of terrorist attacks, the economic analysis of premial law and other topics intersection of Law and Economics. She is also practising lawer. Email: [email protected]
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Journal of Business Research journal homepage: www.elsevier.com/locate/jbusres
How does the terrorist experience alter consumer behaviour? An analysis of the Spanish case☆ Thomas Baumert, María Mercedes de Obesso, Esther Valbuena
⁎
ESIC Business & Marketing School, Avenida de Valdenigrales s/n, Pozuelo de Alarcón, 28223 Madrid, Spain
ARTICLE INFO
ABSTRACT
Keywords: Terrorism Consumer behaviour Traumatic experience Emotional response
Although the number of terrorist casualties has recently decreased, terrorism still presents a threat to society. Within the last 20 years there has been a significant increase in the number of monographic studies about terrorist incidents’ impact on consumer behaviour. However, the present study is the first to analyse whether a terrorist threat specifically alters the consumer behaviour of direct victims. According to the literature, the impact of terrorism on many sectors is lower than originally expected and, if significant, only short term. We hypothesize that this influence is more significant and lasts longer with direct victims, who have undergone traumatic experience. For this purpose, we explore how victims of terrorism in Spain respond to hypothetical scenarios describing a terrorist plot against airplanes at an international airport. In addition, we check if there are significant differences between participants when confronted with situations in which they have to opt between taking or cancelling a planned trip by plane under the menace of a (hypothetical) terrorist attack.
1. Introduction After the events of 9/11, which convulsed the Western world, policymakers started worrying about the economic consequences of terrorism (Neumayer, 2004:262). Accordingly, academics soon began analysing both the macro- and micro-economic effects that might derive from those attacks, later generalising them to other scenarios and sectors. Since then, studies regarding the economic repercussion of terrorism—both from the input (terrorist financing)1 and output (economic consequences of terrorism) sides2—have gained broad attention not only from scholars and policymakers but also from the media in general, spreading the main results to all levels of society. Hence, although in the aftermath, the economic repercussions of the 9/11 attacks still tended to be broadly overestimated, nearly two decades of
monographic studies have allowed us to obtain a sharper image about how terrorist actions affect the economy. Today’s markets, however, are composed of more aware consumers whose decisions are less influenced by an irrational fear of a terrorist threat. Although during 2017, the number of deaths due to terrorist incidents decreased worldwide 27% in comparison to the previous year (18,814 casualties) and decreased by 75% in Europe, the estimated global economic impact of terrorism still amounted to a minimum of $52 billion (Index, 2018). Hence, understanding the emotional mechanism through which the threat—and, more so, the direct personal experience—of terrorism might alter consumer behaviour is still a critical matter, especially as the perceived relevance of a terrorist threat in consumer decisions still differs significantly between business managers and customers, as has been pointed out specifically in the tourism and
☆ This research was partially supported by the United States Department of Homeland Security through the Center for Risk and Economic Analysis of Terrorism Events (CREATE) under grant number 2007-ST-061-000001 under the direction of Prof. David J. Weiss (California State University). However, any opinions, findings, conclusions, or recommendations in this document are those of the authors and do not necessarily reflect views of the United States Department of Homeland Security. The authors would like to express their gratitude towards the Spanish Association of Victims of Terrorism (AVT) for their support and participation in the research project and Prof. Mikel Buesa (Complutense University, Madrid) for his help and advice. ⁎ Corresponding author. E-mail addresses: [email protected] (T. Baumert), [email protected] (M.M. de Obesso), [email protected] (E. Valbuena). 1 Taking only into account the books on the subject, as including single articles would exceed the extent of this work, we cite Adams (1986), Ehrenfeld (2005), Napoleoni (2004), Giraldo and Trinkunas (2007), Taylor (2007), Bierstecker and Eckert (2008), Hinojosa (2008), Pieth et al. (2009), Odeh (2010) and D’Souza (2011). 2 Leaving aside the numerous articles, we point out the following monographs: Frey (2004), Suder (2004, 2007), Enders and Sandler (2006), Richardson et al. (2005, 2007, 2009), Costigan and Gold (2007), Brück (2007), Krueger (2007), Keefer and Loayza (2008) and Buesa and Baumert (2010); also, although with a broader scope, Silke (2018).
https://doi.org/10.1016/j.jbusres.2019.11.085 Received 18 June 2019; Received in revised form 28 November 2019; Accepted 29 November 2019 0148-2963/ © 2019 Elsevier Inc. All rights reserved.
Please cite this article as: Thomas Baumert, María Mercedes de Obesso and Esther Valbuena, Journal of Business Research, https://doi.org/10.1016/j.jbusres.2019.11.085
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hospitality sector (Atkins, Chew, Gschwind, & Parker, 2003; Pizam, 2010) and, more recently, in the travel industry (Business Traveller, 2017)—the sectors the present study considers.3 The starting point for this study is the definition of terrorism as a sort of asymmetric economic war aimed to economically and psychologically erode its opponent (Bates & LaBrecque, 2019; Baumert, 2008, 2010; Buesa, 2010). Thus, terrorists will first select those objectives that imply a major economic impact and then those that allow their message to be spread through international media coverage. As shown later, the role of media is fundamental and has been incorporated into our model. The previous definition fits the context of terrorism as a ‘predatory war model’, as presented by Buesa (2010). In other words, from an economist’s point of view, terrorism might be understood as a form of political action, exerted by a certain organisation, consisting of the systematic use of violence against people and property as a means of achieving the public’s support for their cause, not by ideological persuasion but through fear; the terrorist’s final goal is to undermine the will of citizens and the state until they are forced to accept the terrorist’s demands (Buesa & Baumert, 2018). To meet these aims, terrorists try to influence customer behaviour through fear as a mechanism for magnifying the repercussion of their attacks. Thus, for example, in the case of 9/11—without doubt, the most iconic single terrorist incident of the present century—it seems clear that Al-Qaeda soon realised the economic dimension of the attacks against the World Trade Center as an action aimed precisely at the financial core of the U.S. economy, being well aware not only of its psychological impact to the world but also of its economic repercussions for the U.S. In this sense, it might be worth remembering an original speech by Osama Bin Laden recorded three years after 9/11:
significant effect on aggregate demand. It is only through a persistent terrorist campaign that lasting economic damage might be inflicted.7 However, in this increasingly complete image of how terrorist incidents might affect an economy, little effort has been made so far, to the best of our knowledge, to determine the precise mechanism through which terrorist threats impact individual consumer behaviour. Accordingly, the present article, which represents the second stage of an international study on the emotional and behavioural responses to a terrorist threat (of which an overview of the results is given in the next section), analyses to what degree—if at all—the immediate experience of terrorism (i.e. being the victim of a terrorist attack) significantly alters consumer behaviour. The conclusions obtained hold potential for a better understanding of risk perception and its impact on consumer behaviour—and, thus, for the marketing departments of the products and services affected—in periods of uncertainty and fear such as those following major terrorist attacks. Although, to the best of our knowledge, no study has tried to measure the possible effect of a terrorist attack on consumer behaviour, taking as a sample real victims (i.e. people who have survived a terrorist attack), there have been several works that have centred their attention on how a terrorist threat might alter consumption habits, which are reviewed in the next section. The present study aims to complement this literature—the main result of which is that a terrorist threat, if it has an effect at all, only has a short-term impact (i.e. it is capable of altering consumer behaviour only in the short term), thus only marginally influencing the affected region’s economic growth—by testing whether terrorist attacks are capable of altering the consumer behaviour of victims in the long term. In other words, the study examines whether the traumatic experience of having directly suffered a terrorist attack alters consumption decisions more significantly than a mere terrorist threat. If not, it might be concluded that terrorists’ strategy of conceiving attacks as a means to economically erode their opponents is based on a crucial theoretical misconception, as people’s resilience would be stronger than fear. This would also imply that, under certain circumstances, even a short-term effect in the tourism, travel, and hospitality sector might be mitigated by positive incentives such as allowing changes in flight and accommodation dates or upgrades for free (cf. Hajibaba, Boztuğ, & Dolnicar, 2016).
We [Al-Qaeda] are continuing this policy in bleeding America to the point of bankruptcy […] We, alongside the mujahedeen […] using guerrilla warfare and the war of attrition […], bled Russia for ten years until it went bankrupt and was forced to withdraw in defeat […] Every dollar of al Qaeda defeated a million dollars, by the permission of Allah, besides the loss of a huge number of jobs […]. As for the economic deficit, it has reached record astronomical numbers estimated to total more than a trillion dollars. […] And it all shows that the real loser […] is the American people and their economy.4
2. An overview of previous studies Shortly after the attacks on the Twin Towers and the Pentagon, Nobel laureate Klein and Ozmucur (2002) published a research article in which they observed a shift in the pattern of consumption within the U.S. as a result of 9/11. More complex, and relevant for the purposes of our study, is the work by Choi, Kwon, and Lee (2007), who adopted terror management theory to explore how people’s materialistic consumption behaviours can be influenced by traumatic social events such as 9/11. Using survey data from a representative sample of the U.S. adult population, they examined the influence of mortality salience on two consumption behaviours—brand name consumption and compulsive consumption—concluding that people with a greater fear of becoming a terrorism victim also show a greater tendency for brand name consumption and compulsive consumption. These results agree with those previously obtained by Mandel and Heine (1999). For their part, Dube and Black (2010) evaluated differences in consumer perception
When studying the economic impact of terrorism, it is necessary to distinguish between two main cases: (a) single or isolated terrorist incidents of a certain magnitude (e.g. 9/11, the Madrid, London, Mumbai and—to a lesser extent—Boston bombings and the more recent attacks in Paris, Nice, Berlin, and Barcelona) and (b) countries or regions that suffer terrorist attacks, even if on a smaller scale, continuously during an extended time period (e.g. Ireland, Spain, Israel, Columbia, and Turkey). Usually the former is related to transnational terrorism with an Islamic background, such as Al-Qaeda and ISIS,5 whereas the latter is linked to nationalist/separatist groups (e.g. IRA, ETA, and PKK) or to politically oriented (mostly left-wing) terrorists, such as the Colombian FARC.6 Although single attacks of a great magnitude might have an important direct economic impact, only rarely will they have a 3
For a recent theoretical discussion on the impact of terrorism on the tourist sector, see Naumann, Edmonds, and Frear (2018). 4 http://edition.cnn.com/2004/WORLD/meast/11/01/binladen.tape/ [accessed January 14, 2019]. 5 ISIS could belong to either category, depending on whether they are acting outside of or within the borders of the territory they control. 6 These categories are not exclusive, as ETA not only vindicates an independent Basque Country but also a Marxist-Leninist-oriented one. Similarly, the terrorist attacks suffered by Israel might not only have a nationalist but also a religious motivation.
7 As shown, for the Spanish case, by Abadie and Gardeazabal (2003), among others. Some authors argue that even the 2008 crisis was ultimately the result of 9/11, as the FED’s decision (supported by the European and Japanese central banks) to guarantee unlimited market liquidity in the aftermath of those attacks set, through an excess of cheap money, the basis for the subprime crisis. However, even if a certain connectivity between events seems plausible, it is obvious that Al-Qaeda had not foreseen that reaction, so it should not be considered to have had any effect as a result of the attacks against the Twin Towers and the Pentagon (cf. Buesa & Baumert, 2018).
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before and after terrorist incidents such as 9/11, finding significant differences in consumer ethnocentrism, patriotism, time management, and attitude towards the regulation of businesses and product quality following a terrorist attack, factors that then impact consumer purchase decisions. However, the authors did not analyse whether these effects are lasting.8 Herzenstein, Horsky, and Posavac (2015) conducted three studies with diverse methodologies and populations to explore how concerns with terrorism affect individuals’ behaviour. Two studies were conducted in Israel, showing that concerns of frequent terrorism increase people’s desire for control and may lead to avoidant behaviours. The extent of the avoidance response depends on consumers’ perceptions of whether they have some control over the odds of becoming a victim of a terror attack. When individuals perceive their control to be low, they exhibit more avoidant behaviour, changing their preferences and consumptions. The authors further found that individuals’ desire for control increases when they are primed for terrorist activities (compared with when they are prime for general mortality). The Israeli experience is of relevance, as residents of that country—unlike those of the U.S.9 but similar to those of Spain, where our experiment takes place—have long experience with terrorism and thus might be more aware of a permanent risk than those from other countries in which attacks occur less frequently. Accordingly, in times of high risk perception of a terrorist attack, people might shift from buying in stores or malls to online shopping as a safer alternative (cf. Predmore, Rovenpor, Manduley, & Radin, 2007). Similarly, Rew and Minor (2018) explored the role of consumer resilience and its effect on the relationship between corporate social responsibility (CSR) and consumer attitude by exposing the subjects of their study to (hypothetical) news of a traumatic incident, such as a terrorist attack or gun violence. They found that CSR has a positive association with consumer attitudes and resilience and, probably even more importantly, that consumer resilience helps in improving attitudes (consumer attitudes are affected according to the level of resilience). Finally, there are several studies worth pointing out, as they examine the effects of the terrorist threat on travel intentions, specifically in the same context as that of the experiments presented in the present paper.10 In the first, Floyd, Gibson, Pennington-Gray, and Thapa (2004) examined the relationship between perceived risk and travel intentions among residents in the New York City area.11 The timing of the survey (November 2001) provided the opportunity to evaluate the effect of perceived risk on travel intentions during the aftershock following September 11, 2001. The study found that intentions to take a pleasure trip in the next twelve months (at the time of the survey) were related to safety concerns, perceived social risk, travel experience, and income. For their part, Seabra, Abrantes, and Kastenholz (2014), by applying a structural equation model to a sample of 600 international tourists travelling in Portugal, Spain, and Italy, concluded that tourists are motivated to acquire information about terrorism in the media, revealing the attention given to news regarding this topic, which in turn directly influences their risk perception. This risk perception also directly influences tourists’ involvement in trip planning, specifically
information-seeking before and during a trip. Liu and Pratt (2017), following a resilience approach similar to that of Rew and Minor (2018), found no long-term effect of terrorism on international tourism demand and observed a short-term effect that is quite limited from a global perspective using panel data models. Out of 95 countries, only nine face a long-term impact of terrorism on tourism and 25 show a short-term impact using time series models, implying that international tourism is resilient to terrorism. The influence of terrorism is susceptible to political instability, income levels, and tourism intensities. Recently, Corbet, O’Connell, Efthymiou, Guiomard, and Lucey (2019) estimated the influence of terrorist attacks on European tourism through the short-term post hoc response of the airline industry and passengers, applying seasonally adjusted ARMA-GARCH methodology datasets that examine changes in tourism as measured by available seat kilometres, seats filled, and changes in fares and revenues. They found that traffic flows fell substantially in most cases studied despite significant fare reductions; however, the reductions varied substantially based on the flight origin and ticket type purchased. It could be possible for companies to prevent cancelations by following an approach similar to that of the hospitality sector, in which, according to Hajibaba et al. (2016), certain preventative actions seem to reduce cancelations—the most effective being a change of accommodation, especially when combined with an upgrade, followed by information updates and, finally, the provision of security devices or security staff. However, the number of studies that have examined how terrorist attacks affect consumer behaviour is still quite low, even when including those from psychology and not just from the field of business studies. Among these, although they make comparisons between countries accustomed to terrorist threats (such as Israel) and others less so (such as the U.S.), none seem to specifically observe possible changes in the consumption patterns of the victims of such attacks. 3. Design of the experiment12 In the present study, we explore how victims (compared with nonvictims) of terrorism in Spain respond emotionally and behaviourally to hypothetical scenarios describing a terrorist plot against airplanes at an international airport (see Box 1). The respondents were asked to imagine having already planned a flight when news of an impending attack surfaces. The reports were ascribed to NBC News and CNN. The attackers were armed with man-portable air defence systems (MANPADS): mobile shoulder-fired missiles that can be carried by one man and set near an airport. The participants were told that the weapons were distributed by the U.S. to Afghans fighting the Russians during the 1980s, but several thousand remained unaccounted for. The fictional account also added that according to an intercepted email, 300 MANPADS had been shipped to the target country. The terrorists had mapped out potential launch locations near the airport. Although we assured participants that the scenarios were fictional, the verisimilitude of the accounts was inescapable. To generate predictions of how the reports would affect behaviour, we employed factorial forecasting (Weiss, 2012), a methodology based on functional measurement. Embedded in the scenarios were factorially manipulated variables reporting the response of the government and recent trends in passenger load. We anticipated that how well the authorities were coping with the plot would influence how much fear people felt. The behaviour of other passengers was expected to serve as a social norm: ‘if my peers are reluctant to fly, perhaps I should be, as well’. These two aspects were our between-subject factors; to maintain realism, a respondent was exposed to only one combination of government reaction and passenger load. The nested structure avoids
8 Sigirci, Rockmore, and Wansink (2016) published the results of their research under the title ‘How traumatic violence permanently changes shopping behaviour’. However, the article was later retracted by the journal’s editors, as they found that the raw data did not support the conclusions of the article (Frontiers Editorial Office, 2017). 9 For a comparison between consumer reactions in the U.S. and Israel regarding terrorist threats, see Marcus and Shekter-Porat (2001). 10 We do not review empirical works that measure the economic impact of terrorist threats on the tourism and travel sector from an aggregated (i.e. macroeconomic) perspective, an overview of which can be found in Baumert (2016). 11 Previously, Blalock, Kadiyali, and Simon (2007) studied the impact of post9/11 airport security measures on the demand for air travel.
12 The description of the experiment’s design is taken from Weiss et al. (2016).
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Box 1 The basic incident. ‘NBC News has reported that an international terrorist organisation is planning to use man-portable air defence systems (MANPADS) to cripple the airline industry. Intelligence reports suggest the uncovered plot was in the advanced stages of planning. The terrorists had mapped out launch locations within a couple of miles of airports. These locations are believed to have been selected because they allow shooters to simply drive to a good vantage point and avoid airport security altogether. Sources also confirm that an email was recently intercepted asserting that 300 MANPADS have been shipped from Iran to the U.S. There is currently no technology installed within aircrafts to counter the missiles’. Source: Own elaboration. 4. A summary of the results from the first stage of the study The first stage of our study consists of two bi-national experiments regarding emotional and behavioural responses to a terrorist plot against commercial flights, examining both feelings and projected action (Weiss et al., 2016). The research employed hypothetical scenarios in which terrorists attacked airplanes with shoulder-fired missiles as they were landing or taking off from an international airport. The scenarios were built around two factorially crossed manipulated variables, each with three levels: (1) government announcements or actions and (2) social norms, expressed as variations in airline ticket sales. Each respondent was given a questionnaire containing only one of the nine scenarios. Experiment 1 was conducted in Spain and California (n = 360, 50% female) and Experiment 2 in Israel and California (n = 504, 50% female). Participants in Experiment 1 expressed only a moderate degree of fear (cell means were 5–7 on a 10-point scale), and our manipulated factors did not control that fear in the expected way. It is possible that the levels were interpreted differently. For example, to some respondents, foiling the plot might constitute evidence that the threat is real, whereas evaluating facilitates the belief that there is no true threat. People are less likely to fly for a vacation than a wedding or job interview. However, in comparison with California, men in Spain are more likely to go ahead with the vacation flight. In both studies, fear and flight plans were not differentially affected by governmental response or social norms, and, overall, women expressed more fear than men. In addition, Experiment 1 examined the purpose of the trip. Most respondents would not change a planned flight to attend a close friend’s wedding or important job interview, but a substantial number would postpone a vacation or drive to a different location. Experiment 2 featured escalating attacks. In each case, a passenger airplane was fired upon by Al-Qaeda (in the U.S.) or Hezbollah (in Israel) operatives as it was flying near the airport. Next, the attacks became more effective, causing successively greater death and destruction. In the first attack, there were no deaths and only 15 of the 146 passengers incurred minor injuries. In the second attack, a week later, all 382 passengers and 15 crew members were killed. In the third attack, another week later, two planes (one arriving and one departing) were shot down, with all passengers and crew members killed. This escalation yielded increased fear and more cancelled trips. Curiously, within both studies, responses were similar across countries despite national differences in direct experience with terrorism. Because Israel and Spain have been under siege for many years, we expected that residents might have become inured to the threat of terrorism. However, our results suggest that this is not the case: Levels of fear were comparable in the three countries. Perhaps more tellingly, within Israel, direct exposure to missile fire did not influence fear. We
Fig. 1. Overview of different possible scenarios. Source: Own elaboration.
potential contrasting effects that might arise if the respondent were to compare levels of the manipulated variables (Weiss et al., 2016). The nine between-subject conditions were defined by crossing three levels of government response (Fig. 1)—(1) ‘Because this is a serious threat and we have no leads, we will close the airport for three days’ (Serious threat); (2) ‘We have some leads and are evaluating security; the public is asked to be vigilant’ (Evaluating); and (3) ‘The ringleaders have been arrested, MANPADS have been confiscated, and we recommend business as usual’ (Plot foiled)—with three levels of social norms—(1) ‘Despite price cuts, air ticket sales have decreased by 40%’ (Sales down); (2) ‘Despite a price cut, ticket sales have remained steady’ (No change); and (3) ‘With a price cut, ticket sales have increased by 20%’ (Sales up). Box 2 shows one of the nine possible scenarios. Our study included within-subject factors as well, focused on the nature of the planned trip (see Box 3). A person might normally be quite reluctant to fly but will do so under exigent circumstances such as a family emergency. The expectation was that people would be more willing to accept the risk to go to an event that could not be easily rescheduled, such as a wedding, than one that could be postponed, such as a job interview or vacation. The possible responses to the questions related to these scenarios were the following codified choices: (1) very unlikely, (2) unlikely, (3) somewhat unlikely, (4) somewhat likely, (5) likely, and (6) very likely. We anticipated that government reaction and social norms would combine additively. The import of additivity is that the factors combine independently, which means that compensation is feasible. For example, strong reassurance by the government might be able to overcome the adverse effect on flying generated by a social norm that discourages passengers.
Box 2 Combination 2,1 (one of nine possible combinations). ‘Following the NBC News story, a Department of Homeland Security spokesperson said that MANPADs represent a serious threat. He noted that, at this time, they have no strong leads regarding the ringleaders or the locations of the MANPADS. The department has decided to close down the airport for the next three days to evaluate security in the surrounding vicinity. CNN just reported that during the two weeks since the story broke, major airlines have announced a ticket price cut, and sales have remained steady’. Source: Own elaboration. 4
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Box 3 Within-subject factors. (1) Within one month of the media report, you were planning to fly to your best friend’s wedding 1,500 miles away. You and this friend have shared every major life event together in the past and have promised each other to continue to do so in the future. What would you do about your plans to attend the wedding? (2) Within one month after the media report, you were planning to fly to attend a job interview 1,500 miles away. You have been awaiting such an opportunity for several years. This position would not only double your current salary but would bring you several steps closer to your lifelong career goal. (3) Within one month after the media report, you were planning to fly to go on a leisure vacation with friends and family to a place 1,500 miles away. You have been wanting to take this particular trip for several years. You finally have the opportunity and finances to go after saving for over a year. Also, you have devoted a great deal of time researching the area to create an exciting agenda during your stay. Source: Own elaboration. conclude that a nation’s historical record of terrorism has little impact on its people’s anticipated reactions to a novel threat.
Fig. 4 shows the results obtained regarding the within-subject factors. As can be seen, more than 70% victims of terrorism would not alter their planned trip to either a best friend’s wedding or an important job interview. However, this drops to 56% in the case of vacations, probably because it is easier to change the date of a trip or the destination. Thus, the victims’ reaction can be considered very rational. However, the victims present a higher propensity not to take the planned trip or to shift to a different means of transportation than the non-victims (first stage of the study), especially in the case of a wedding, and slightly less so in the case of a job interview. No differences appear in the case of a vacation, in which both groups present very similar results.15 Thus, it becomes evident that having suffered a terrorist attack makes people perceive a higher level of fear when confronted with the possibility of a new attack and increases their sensitivity to the two factors we manipulated in our experiment. It also makes them more cautious and thus more inclined to opt for alternative transportation choices but not to cancel their plans. Thus, terrorism can shift consumer behaviour under certain circumstances, especially when terrorist incidents are not just a threat but an experience; however, because it represents a zero-sum game from an aggregated point of view, it has no effect on the economy as such. However, it seems appropriate to handle the obtained results with a degree of caution, especially when extrapolating and generalising them, as the particular characteristics of the sample introduced some biases that cannot be completely ruled out. For example, the victims of terrorism belonging to the AVT—nearly all victims of separatist terrorist groups—include many members who, prior to the attacks, were members of the Spanish Army, police, or Civil Guard, for whom the question about the job interview might be less realistic than the other two options (wedding and vacation). Furthermore, the sample size should be broadened to reduce the margin of error. In addition, a larger sample would allow the obtained results to be more finely tuned, for example, by considering not just the group’s average values but taking into account how much time has passed since they suffered the attack. However, despite these limitations, we believe the results obtained are still of notable relevance, both for the field of economic psychology and for business agents, and facilitate further broadening of the study scope by its replication in other countries.
5. Does having suffered a terrorist attack alter the victim’s consuming behaviour? In addition to the results obtained in the first stage of the research project, in a second stage, we sought to determine whether not just fearing an attack but having already suffered one—shifting from the mere possibility to a traumatic reality—may imply a more adverse emotional and behavioural response to our experiment (hypothetical scenarios describing a terrorist plot against airplanes at the nearby international airport they are likely to use). To run this experiment, we benefited from the fact that most of the victims of terrorism in Spain, legally recognised as such,13 are members of the Association of Victims of Terrorism (AVT).14 After having obtained the permission of the AVT to contact their members, we did so by email, sending them the contact details and access to the online questionnaire. Out of approximately 4,400 members of the AVT—that is, nearly all the surviving victims—we obtained 93 valid responses. Although at first glance it might be argued that the size of our sample (n = 93) is quite small, it should be borne in mind that adequate sample size depends on the homogeneousness of the distribution and the size of the analysed universe; as the latter is N = 4,400, our sample, despite its small magnitude, exceeds by 50% the minimum necessary size for inferring statistically significant results with a margin of error of 10%, the standard value in the field of economic psychology, to which the present study is ascribed. As can be observed in Fig. 2, the overall results are coherent with the exception of the plot foiled case, in which both the Tickets sales increased” and “Tickets sales remain steady” present higher values than expected. However, in comparison to the non-victims, the obtained results are much closer to the ones anticipated according to theory, than those obtained in the Californian sample, where factor manipulation did not produce the expected reaction (Weiss et al., 2016). What is more relevant is that the mean values in each cell for the victims (values ranging between 6 and 9) are much higher than those for the nonvictims (4 to 6,5) at a statistically significant level of 95% (Fig. 3), and the gap between the perceived fear of victims and non-victims increases the more likely the plot becomes. It is worth noting that this gap remains when compared with other non-victims from California (cf. Weiss et al., 2016).
6. Conclusions Although the number of terrorist casualties has recently decreased, terrorism still presents a major threat to society and to the world economy. The past decades have seen an important increase in the number of monographic studies about the economic impact of terrorism, allowing for a better understanding of the economic repercussions of the phenomenon.
13 In accordance with Law 29/2011 of 22 September 2011 on the recognition and integral protection to victims of acts of terrorism. 14 The Asociación Víctimas del Terrorismo (AVT) is a not-for-profit, private entity formed in February 1981 to assist the victims of terrorism in a moment when they suffered the consequences of institutional disregard and the marginalisation of many sectors of the Spanish society. The AVT currently represents around 4,400 victims of terrorism in Spain of more than seven different terrorist organisations and holds offices in several Spanish cities to help victims all over the Spanish territory.
15 Unfortunately, a direct numerical comparison with the group of non-victims is not possible, as the possible answers of the Californian sample and of the group of Spanish non-victims were codified slightly differently.
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9.5 9 8.5 8 7.5 7 6.5 6 5.5 5 PLOT FOILED
Ticket sales increased
PLOT BEING EVALUATED
Ticket sales remained steady
STRONG PLOT
Ticket sales decreased
X-axis: perceived fear; Y-axis: risk level Fig. 2. Results for victims (Spain). X-axis: perceived fear; Y-axis: risk level. Source: Own elaboration.
7 6.5 6 5.5 5 4.5 4 3.5 3 2.5 2 PLOT FOILED
Ticket sales increased
PLOT BEING EVALUATED
Ticket sales remained steady
STRONG PLOT
Ticket sales decreased
X-axis: perceived fear; Y-axis: risk level. Fig. 3. Results for non-victims (Spain). X-axis: perceived fear; Y-axis: risk level. Source: Own elaboration.
In this context, the present study is the first attempt to analyse how a terrorist threat alters consumer behaviour and how a terrorist experience (i.e. having suffered and survived a terrorist attack) might affect people’s consumption decisions. For this purpose, we explore how victims (in comparison to non-victims) of terrorism in Spain respond emotionally and behaviourally to hypothetical scenarios describing a terrorist plot against airplanes at the nearby international airport. In addition, we also check if there are significant differences between them when confronted with having to choose whether to take a flight to attend a best friend’s wedding, an important job interview or for a vacation under the threat of an imminent terrorist attack. Our findings show that having suffered a terrorist attack makes people perceive a higher level of fear when confronting the possibility of a new attack and increases their sensitivity to the two factors we manipulated in our experiment (i.e. government response and public reaction). At the same
time, it also makes them more cautious and thus more inclined to opt for alternative consumption choices but not to cancel their plans. Therefore, our results agree with those obtained by the previous studies (e.g. Rew & Minor, 2018) presented in section two, all of which coincide in concluding that a terrorist threat generally only has a short-term impact if at all, thus only altering consumer behaviour—at least in the tourism, travel, and hospitality sector on which the present article focuses—for a brief time. This means that terrorism only marginally affects the attacked region’s economic growth. By analysing whether terrorist attacks might be capable of altering the consumer behaviour of victims in the long term, we went a step further than the previous studies by testing a more thorough hypothesis, namely whether the traumatic experience of having directly suffered a terrorist attack alters consumption decisions more significantly than a mere terrorist threat. Companies acting in the tourism, travel, 6
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25.3
35.2
35.2
30.8 37.4
36.3
2.2 8.8
5.5 5.5
3.3 9.9
15.4
8.8
4.4 6.6
15.4
WEDDING
JOB INTERVIEW
VACATION
6.6
Very unlikely
Unlikely
Somewhat unlikely
Somewhat likely
Likely
Very likely
Fig. 4. How likely is it that you would take a flight with a major airline to attend a…?. Source: Own elaboration.
and hospitality sector should be aware of this crucial fact and react to a terrorist incident, allowing flexibility in changes of flights or accommodation dates and offering free upgrades. The present article started by defining terrorism as an asymmetrical war meant to economically erode opponents. Our results prove that this strategy is based on a critical theoretical misconception, as the victims’ resilience seems to be stronger than their fear. Our results also show that although terrorism can shift consumer behaviour under certain circumstances in the short term, it is not able to make people abandon their plans, as even former victims behave rationally and, despite being more sensitive to the perception of a terrorist risk, they rarely change their plans. It seems that terrorists are condemned to lose the economic war they started.
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Psychologica, 15(3). Weiss, D. J. (2012). ‘The use of factorial forecasting to predict public response. Psicológica, 33, 695–710. Thomas Baumert PhD. is professor of Economics and History at the ESIC Business and Marketing School in Madrid. He obtained his PhD at the Complutense University of Madrid (2006, Honour degree). His main areas of research focus on the economics of innovation, the economics of terrorism, the economic analysis of premial law, and the history of economic thought. Among others, he co-edited the much-acclaimed book La hora de los economistas (Madrid, 2010), and, together with Mikel Buesa The Economic Repercussions of Terrorism (Oxford, 2010) and Juan Velarde: testigo del gran cambio (Madrid, 2016). He has edited Heinrich von Stackelberg in Spain (Madrid, forthcoming) and is currently working on a biography of this noted German economist. Email: [email protected] María de las Mercedes de Obesso PhD. is Professor of Business at the ESIC Business and Marketing School in Madrid (Spain) and Director of Quality Undergraduate Area. Her research areas include, qualty control, balanced scorecard, the economics of terrorism, especially on the impact of terrorist attacks, the economic analysis of premial law. Email: [email protected] Esther Valbuena PhD. is Professor of Law at the ESIC Business and Marketing School in Madrid (Spain) and Director of the Humanities and Law Departament. Her research areas include the economics of terrorism, especially on the impact of terrorist attacks, the economic analysis of premial law and other topics intersection of Law and Economics. She is also practising lawer. Email: [email protected]
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