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Terrorism has been a major problem around the world and it has gained increased attention in the media in recent times. This has been most the media centered topic due to its recent increase globally. Although terrorist are using their tactics since ancient times, increasing use of sophisticated arsenal by terrorists and the concerns in terms of increased capability & effect for mass victims have led scholars in the social and political sciences to place high priority on understanding the root "causes" of terrorism and the means by which these acts can be prevented. The central objective of this research paper is to describe and to estimate how behavioral responses affect economic impacts. In order to characterize the terrorist activity in nonlinear manner and to create a wide range of economic, social and physical influences around the globe, these can be interacted by information and communication channel, emergency response system and the support organizations.
The biggest and most booming business and the most profitable business today on the globe is terrorism. Terrorism is a business to gain power, control, fear and money. Terrorism comes from the word "terrorisme". Further terrorisme is derived from "terreo" (Latin Verb) meaning "I Frighten". In order to know the effect of terrorism on behavioral economics, it is very important to understand terrorism, who is the creator (producers) of terrorism and the objectives of terrorism.
Terrorism is the use of extreme fear in order to coerce people especially for political reasons. Basically terrorism is to spread fear. Besides having a short term effect on immediate target, it is designed to have a far reaching psychological effect among people.
Human behavior is experienced throughout an individual's entire lifetime. It includes the way an individual acts based on different factors such as social norms, genetics, core faith, and his attitude. Human behavior is influenced by the social-cultural, coercion, genetics, values, rapport, authority, ethics, hypnosis, persuasion, emotions and/or attitude. Certain rules are being expected to be followed by humans in the society, the way people behave in what conditions. The human behavior can be: active, passive or active-passive state. Active state is the state wherein the behavior is aggressive towards others, passive state is when he defends (defensive state) himself or others, and in active-passive state the person decides whether he should be either aggressive or defensive. It is a bit of confusing stage for a person.
Impact of terrorism
Terrorism is used either for a particular reason or for multiple impacts in the same attack. Following impacts can be found from various terrorism activities.
Economy of state
Majority of the attacks are designed to affect the economy of state. From any kind of attack, directly or indirectly the economy of the state gets affected. Directly the damage caused by the attack such as construction damage, loss of human lives, etc. while indirectly affecting the behavior of the people.
Behavior of the people
Terror attacks create panic among people. Panic affects the pattern of consumption and investment behavior of individuals and companies and can lead to distinct market disturbances. According to, Dr. Michael Williams, the main effect of the terrorist attack is their ability to disrupt the population spending pattern.
Imbalance between communities
As the history tells there have always been tensions among communities, due to one reason or the other. So terrorist try to create or ignite the already existing tension. This leads to change in the behavior of one community towards other, which leads to aggressive nature of the community and in turn would lead to loss of business between both the communities.
The impact of an increase in the degree of terrorism on consumers' decisions to invest in controlling fear is ambiguous. When terrorism primarily increases objective dangers, consumers are less likely to invest in controlling fear. However, when terrorism has a negligible impact on objective danger but large eï¬€ect on subjective assessments of danger, then an increase in the degree of terrorism induces some individuals to invest to reducing fear.
The expected beneï¬ts of investing in controlling fear increase in the degree of terrorism if and only if the relative decline in the subjective probability to survive is larger than the relative rise in objective danger. Terror makes say consumption of commodity x (assumption) less attractive as it increases objective danger and intensiï¬es the emotion of fear for those who do not spend on controlling fear. When terrorism increases objective danger more than subjective danger that is when consumers are less likely to invest in controlling fear and therefore reduce consumption of x. When terrorism has a negligible impact on objective danger but a large eï¬€ect on fear, then the impact of terrorism on consumption of x is ambiguous for those who invest in controlling fear.
It has been shown that an increase in the degree of terrorism reduces consumption of x as long as it does not raise the expected beneï¬t from investing in controlling fear. When terror incidents intensifies fear even in situations in which there is almost no impact on objective danger consumers with a greater taste for x are less likely to change consumption plans whereas those with a lesser taste for x overreact and substitute consumption of x for all other goods (x). We now turn to the interaction between the eï¬€ects of an increase in terrorism and greater tastes for x.
Creators of terrorism
Terrorists are created as they have no choice due to following reasons:
Government creates terrorist in one way or the other. Either they produce them as we have seen that Al Qaeda was generated by USA to affect the Russia during world war. The law or the behavior of the police or the political system creates terrorist. Last but not the least they are there to take revenge against some individual, nation, or organization. Also when a state attacks another there will be group of people that would oppose to this act and their behavior becomes aggressive towards the state, and when they oppose these acts of war and attack the state then they will be labeled as terrorists.
Food, clothes and shelter are the three basic requirements of a human being to survive. But in today's scenario, it is very difficult to obtain these things. So those who do not have these basic requirements, starve to survive. So under such a situation, they get influenced by other people and come in the business of terrorism. So they join in the activities of terrorism so as to make their family's future somewhat better by getting the money from these organizations. So poverty plays an important role in the making of a terrorist.
A human beings behavior is dependent on the past that he/she had or the environment that surrounded him. If the person is brought up in violent environment than the chances of him being in this business increases. If there has been any incident in the past that affected the persons mind then from that point onwards the psychology of that person changes and somewhere in the mind there is always anger to take revenge. Moreover, in the history there have many religious war and many fights between two religions which goes on till the date. So terrorist organizations take advantage of these incidents and make poor people join them in the name of religion.
Also if there has been any cruel incident with the family of a person then he is more likely to show terror like behavior.
Who are Terrorists?
Anybody who is engaged in a systematic use of terror or an act of violence against non-combatant, in order to coerce people is a terrorist. A terrorist can be an individual, Government or an organization.
War is terrorism with bigger budget. When a country's government declares war on another country, the intention might be to capture the natural resource of that country and giving it some other means of attack. Those who support are terrorist themselves. There are proofs of some countries governments that allow the terrorist groups to stay in their country and support them to attack other country. They also provide them with weapons and even people to take other country. There are countries that sponsor terrorism by giving them a way to live safely, raise money and to prepare for attacks on the innocent people. Now this all the acts of various governments are being known to the world.
There are various organizations that are operating in numerous countries. Some of these groups are once formed by the governments. These organizations are formed for a particular purpose only. Each organization has their goals and work accordingly. Whenever they are in danger or they need help other organization come to help them.
A person due to his past, behavior, worse incidents, under influence, can become terrorist.
Understanding Terrorism from Identity Perspective
While political, sociological, and criminological accounts exist, the majority of the extant literature examines the causes of terrorism from within a psychological framework. Many of these studies regard extremist militant conduct as a function of the individual's psyche and attempt to identify speciï¬c personality traits that would compel a person to act so violently. To deal effectively with this problem of terrorism, it is very much essential to understand the terrorists' actions from their perspective (terrorists). Only in this manner can one design the responses that address the roots of terrorism rather than responding to expression of terrorism in speciï¬c, often dramatic, acts of violence.
Unlike individuals who commit suicide, or carry out, the perpetrators of terrorist acts, school or workplace shootings, murder-suicides, including suicidal terrorist acts, do not display signs of depression, sociopathy, or psychoticism. Rather terrorists involved in suicidal attacks often display a heightened group allegiance, task focus, and sense of purpose.
Terrorists believe that their actions are legitimate and are been sanctioned by the community leaders or religious authorities. An important factor that distinct terrorists from criminals is that the terrorists often attribute their actions to their own "selï¬‚ess goals." That is, terrorists often engage themselves in violent activities as a way of goals of the group in which they belong or promoting the agenda. A review of the burgeoning social science literature on terrorism and conï¬‚icts suggests that identity plays a central role in this literature. Various individuals have suggested that personal, cultural, and social identity processes underlie terrorism and its activities.
Accordingly, one contribution here will be to outline the ways in which cultural, social, and personal identity elements interact with each other to increase the likelihood of participation in terrorism.
The Roles of Cultural, Social, and Personal Identity in Terrorism
The term "identity" refers to a complex theoretical construction which involves elements which originate at three distinct levels:
(a) Cultural identity,
(b) Social identity, and
(c) Personal identity.
Speciï¬c cultural values represented by the Cultural identity is that a person incorporates throughout his life as guiding principles for behavior, such as familism, absolutism in belief, and collectivism. Such values are internalized perspectives derived from multiple sources including involvement with religious, educational communities, national, cultural, and ethnic, exposure through various media, as well as participation in personal social networks. One of the ï¬rst fundamentals of terrorism is, the group comes prior to the individual. It is therefore no fluke that the large majorities of suicide attackers are strongly collectivist themselves or they are based in the countries or regions which are characterized as strongly collectivists. Terrorists normally seek to protect and advance the goals of the groups to which they belong to a greater extent than they seek to advance their own personal goals; Schwartz has characterized terrorism as a "maximally collectivist" position, where the interests of the terrorist "becomes merged with those of the group which he/she represents." Religions are said to be absolutist in nature when they advance their view that they have the accurate and complete understanding of truth, and that thus all other religions are in error. Such absolutism promotes the "us versus them" thinking in which our world is divided into that of believers and nonbelievers. Such thinking, in turn, provides an intellectual rationale for efforts to convert, overcome, or eliminate those identiï¬ed as atheists. There is evidence that religiosity is associated with participation in terrorist acts around the world. Within certain religious faiths, the more rigid and radical one's religious beliefs are, the greater the possibility that one will participate in terrorist activities.
Still another distinct element of cultural identity that can serve to promote terrorist activities in an individual is familism. Within many cultural groups, there is always a hierarchy of loyalties which runs, in inverse order, from the nation-state, to the tribe, to the clan, and to the extended family. Such cultural engagements normally place obligations on individuals for upholding family honor and avenging wrongs done to the family of the individual. When familial and cultural obligations together result in violence directed against members of one's own cultural community, they can be interpreted as normative, even by those towards whom the aggression is directed. When directed against members of other cultural groups, comparable forms of aggressive action may meet the criteria for terrorism.
Social identity theory holds a number of important implications for the study of terrorism. The elements of social identity, such as the identiï¬cation with members of one's own group and demolition of groups that stand in opposition to one's own group, are learned through a variety of direct interpersonal interactions with individuals. These social identity dynamics form an important topic of conversation within the family and peer group, they are inculcated through school as well as academic curriculum, and they may be incorporated into religious prayers, sermons, and religious sponsored activities. Social identity theory holds that one's own group the "in-group" may often be threatened when "out-groups" groups regarded as standing in opposition to the in-group are perceived to be trespassing on the in-group's physical or psychological territory. Thus terrorism is most likely to occur in groups and societies that draw sharp distinctions or lines between the in-group and the out-group(s) and where out-group members are dehumanized (e.g., labeled as "inï¬dels" and lumped into a single "enemy" group).
Dehumanization is achieved when out-group values are contrasted sharply with those of the in-group and judged to be inferior then the in-group values. Such groups or societies will then encourage the members or citizens to displace their anger onto the out-group. For example, some oppressive Middle Eastern and South Asian governments seeking to discourage popular revolts, and thus maintain their grip on power, blame Western societies and their imprudence for the people's suffering. Adding to the tensions between groups is the fact that members of a victimized group are likely to be alienated from those societal institutions seen as controlled by the larger and/or more powerful group. Such alienation may be actively imposed by the larger and/or more powerful group in the form of exclusionary practices. Due to this potential avenues for redressing grievances and reducing tensions between the groups go unutilized. In the absence of dialogic opportunities to reduce threats and redress grievances, aggressive alternatives, including terrorism, may become perceived as the only alternatives available. Because out-group members have difï¬culty gaining entry into these in-group institutions, they may well be unaware as to whether or not these institutions are being used to promote conï¬‚ict. The absence of clarity in this regard can lead the out-group to take repressive actions against in-group institutions, thus intensifying the grievance and worsening the intensity of conï¬‚ict between the groups. Say Muslim youth living in the West are a particularly important case to examine, as they may represent both religious and ethnic conï¬‚icts happening in the west. In some cases, terrorist responses can emerge from these communities-such as the attacks on the London Underground Subway in 2005, the Glasgow Airport in Scotland in 2007, and the Spanish rail system in 2004 in Madrid.
Personal identity refers to individuals' self-deï¬nition, particularly with respect to those goals, values, and beliefs that they hold in such domains of concern as vocation, religion, politics, family roles, gender roles, ethnicity, and personal interests. The identity status paradigm developed by Marcia conceptualized identity formation in terms the dimensions of exploration (the active consideration of alternative identity possibilities) and commitment (the forming of strong, unwavering investment in particular identity elements). Within this paradigm, two potential outcomes have particular relevance for the emergence of a terrorist identity: (a) authoritarian foreclosure and (b) aimless diffusion. Foreclosure represents the adopting of commitments without considering other alternatives, whereas diffusion represents being uncommitted and engaging in little or no systematic exploration. The foreclosed and diffused statuses share the element that group ideals are adopted and internalized. For example, individuals classiï¬ed as foreclosed or diffused have been found to be signiï¬cantly less religiously mature, and to actively understand their faith to a lesser extent, compared to those who have undergone a period of active exploration and developed a set of identity commitments.
There is evidence that authoritarian individuals-especially those who perceive themselves as "outside the mainstream"-may be threats to society because they have the ability, the single-minded and unbothered vision, and the desire to attract followers and form groups based on destructive principles. The potential of authoritarian-foreclosed individuals to engage in (or even lead) terrorist movements may be especially dangerous in parts of the world where hatred of out-groups is "bred to the bone" beginning in early childhood, and where independent personal identity exploration is not encouraged. The second identity status relevant to the development of a terrorist, identity diffusion is characterized by the absence of personally meaningful identity commitments and by confusion about how such commitments might be formed. Aimless-diffused individuals are particularly vulnerable to the allures of terrorism because terrorist ideologies are espoused with certainty, purpose, and commitment that can provide a sense of direction to a previously unguided life. Aimless, diffused individuals who have turned to terrorism include Westerners who have felt disenfranchised from their societies of origin. Aimless-diffused individuals are particularly vulnerable to the allures of terrorism because terrorist ideologies are espoused with certainty, purpose, and commitment that can provide a sense of direction to a previously unguided life. Aimless, diffused individuals who have turned to terrorism include Westerners who have felt disenfranchised from their societies of origin.
In the area of social movements, most theories make no explicit assumption about what motivates an individual. The social structural theorists seek the root causes of political violence and social movements within the structure of the society. In contrast to the meta-structural theorists, psychologists, psychiatrists and social psychologists study individual behavior and attempt to understand their collective behavior.
One of the most interesting findings of this line of reasoning is that while terrorist groups are sometimes led by people, who may be classified as "insane," "psychopathic" or "sociopathic," the foot soldiers of terrorism are rarely diagnosed as such (Crenshaw, 1981; Ferracuti, 1982; Reich, 1998; Silke, 1998; Merari, 1998; Horgan, 2003).
However, the results of the interviews or careful studies of case histories of the terrorists by trained psychologists and psychiatrists produced contradictory results. In fact, the myriad literature on the psyche of the terrorists produced the meager harvest of two conclusions: First, the vast majority of the perpetrators of the terrorist acts, however egregious, cannot be classified as psychotics or suffering from any other diagnosable maladies of the mind. Second, there is no stable profile of terrorists or potential terrorists.
Social structural theories
The sociologists and political scientists hypothesize that social and political movements take place as a result of imbalances within the social structure. For instance, Karl Marx argued that the capitalist system of production dissociates laborers from their own fruits of labor. As a result, they feel alienated. Their alienation gives birth to political actions ("class struggle") against the capitalist socio-political and economic superstructure. Practicing Marxists throughout the world based their revolutionary activities on the theory of class struggle. In this struggle it was not important to focus on the psychological aspects of an individual since their participation resulted from the manifest destiny of the flawed system. Therefore, although "alienation" is a psychological term, Marx and his followers were by no means interested in the psychological state of an individual. They assumed that the existence of alienation of the proletariats would propel them to take up arms against the capitalist system as soon as they realized the "true" causes of their anguish.
Relative deprivation theory
While structural theorists were happy attempting to explain rebellion in the third world nations, the decades of 1960s and 70s saw a rising tide of dissident activities in the affluent West, where the structural inequities were supposed to be low. Davies (1962), Feierabend and Feirabend (1966, 1972) and Gurr (1970) attempted to provide an answer to this puzzle by attempting to fuse an essentially individual-based theory of aggression, proposed by Dollard et al (1939) to the structural conditions of a society. They argued that when expectation outstrips achievement regardless of the absolute levels of economic consumption or the provision of political rights frustration is generated. The collective frustration turns to anger and hence, to violence.
Concerns over mass rebellion and terrorism in Europe and North America, saw a significant increase in government funding for collecting quantitative data on various aspects of political violence. The accumulated numerical information gave a shot in the arms for quantitative research into mass movements and allowed researchers to test hypotheses with statistical techniques. Thus, a number of scholars attempted to establish a link between social movements and factors of economic inequality. For instance, Hibbs (1973), Venieris and Gupta (1983), Muller (1985) attempted to correlate political violence with inequality in income. They found out that social, economic, and political inequalities do provide the necessary conditions for violent uprising, but they are not the sufficient causes. In other words, acts of rebellion do not take place simply because there is widespread frustration. For that they need additional factors.
Resource mobilization theory
The search for the sufficient causes of political violence propelled a number of prominent sociologists (Tilly, 1978, 1993; Tarrow, 1994, McAdam, 1982; McAdam, Tarrow, and Tilly, 1997) to offer theories of resource mobilization. Their theory points to the need of social networks to channel the individual frustrations and alienations into a coherent collective action. In this theory the community institutions and social networks become effective mobilization vehicles for collective action when the dissident leadership can draw on shared beliefs and worldviews that motivate individual actors and legitimize the acts of rebellion. Although the resource mobilization theory attempts to bring about a synthesis between social structural theories and psychological theories, the problem they face is that a theory of rebellion based on leadership and social networking is not amenable to testing of hypotheses based on statistical techniques. Therefore, those who have attempted to offer quantitative evidence have faced number of serious methodological problems (Varshney, 2002).
Classification of Theories of Social Movement and Terrorism
Studies Based on Theoretical Foundations
No explicit assumption regarding
Explicit assumption regarding
(Rational Choice Model)
Strategic use of
and the decision to
participate in a
Equilibrium can be sustained where groups with limited access to opportunity may ï¬nd it rational to engage in terrorist activities while policymaker elites may ï¬nd it rational not to engage in opening access to these groups. The result is then a pattern of reduced economic activity and increased terrorism. Economic activity and terrorism are not independent of one another. In particular, high income and democratic countries appear to have higher incidence of terrorism, and lower incidence of economic contraction. Furthermore, the terrorism they do observe appears to be impacted by the economic business cycle: namely, periods of economic weakness increase the likelihood of future terrorist activities.