The Economic Penalty of Terrorism: Increase in Discrimination against Arabs and Muslims after Paris Attacks

Abstract

What repercussions does Islamist terrorism have for Arab/Muslim minorities in targeted countries? We highlight consequences in the domain of online real estate rental. Using high-frequency data on all transactions happening on the largest Parisian online rental market over the period of November 2014 to March 2018, we are able to trace the evolution of prices and occupancy rates over time. We demonstrate that discrimination against properties hosted by Arab/Muslims rises swiftly in the aftermath of the terror attacks in November 2015 and wanes at a much slower pace. We quantify the average financial loss per listing that results from increased discrimination to equal $178 per month. Our findings not only highlight the presence of discrimination in peer-to-peer transactions but also show how sharing economy data measuring these transactions can be used as a “seismograph” to track and measure the development of discriminatory attitudes in response to societal events.