Does terrorism make people pessimistic? Evidence from a natural experiment

This paper uses a natural experiment to estimate the causal impact of low-casualty terrorist attacks on pessimistic beliefs in Africa. Distinct from fear, pessimism has been found hinder optimal economic decisions and well-being. By comparing survey responses people interviewed same area immediately before after attack, we find that terrorism increases about future living conditions by 11 percentage points. The effect is not driven direct damages or people's expectations national economy, stronger for targeting religious figures among respondents rural areas. Further analysis suggests this tends shift more accurate beliefs. Our results thus show even have substantial