Terror and Tourism: The Economic Consequences of Media Coverage
This paper studies the economic effects of news-coverage of violent events.
To do so, we combine monthly aggregated and anonymized credit card data on tourism spending from 114 origin countries and 5 tourist destinations (Turkey, Egypt, Tunisia, Israel and Morocco) with a large corpus of more than 446 thousand
newspaper articles covering news on the 5 destination countries from a subset of 57 tourist origin countries. We document that violent events in a destination are followed by sharp spikes in negative reporting at origin and contractions in tourist activity. Media coverage of violence has a large independent effect on tourist spending beyond what can be accounted for by controlling for the incidence of violence. We develop a model in which tourist beliefs, actual violence and media reporting are modelled together. This model allows us to quantify the effect of violent events and reporting.
The working paper version fo the paper can be found here. A discussion of preliminary results can be found at the webpage of the IGC.
This is a very complete research project in that we pull together a unique set of data with data generated from supervised machine learning and combine it in a theoretical model of events, reporting and spending. Key to the development of the model was the insight that we can model the connection between objective facts and reporting through a latent state of "danger" which has representations both in terms of violence and news about the violence. In this way we are able to derive two separate sets of beliefs for tourists depending on their information set (objective violence or news).