1. What inspired you to research effective counter-terrorism and the Israeli housing market?
The rocket threat has been one of the major national security challenges facing Israel in the last two decades. The challenge attracts the attention of politicians, defense experts, the media and the wider public. In a previous paper we studied the effects of a massive rocket attack against northern Israel during the 2006 Second Lebanon War. This naturally led us to study the effectiveness of the Iron Dome anti-rocket system, which was developed in response to the 2006 attack.
More generally, terrorism is a serious challenge facing many countries around the globe. There is a lot of academic research on terrorism, but relatively few papers study the effectiveness of policies aimed at curbing terrorism. Our paper helps to fill the gap.
2. Your study found that housing prices were impacted by the introduction of the Iron Dome. What were the main findings and how do they compare to any previous studies of the same topic?
Our main analysis in the current paper focuses on the rocket threat facing southern Israel and on the period 2005-2015. We use the number of rocket-related claims for damages as a proxy for the severity of the rocket threat. The main finding is that an additional 1,000 claims in a locality were associated with 9.5 percent lower house prices before the deployment of Iron Dome (March 2011) but with only 3.8 percent lower prices later.
These results fit well with the results of our previous article, which focused on northern Israel (which, unlike southern Israel, saw only one rocket attack, in 2006) and on the period 2000-2012. In the current paper we extend the period analyzed in the north up to 2015. We find that following the 2006 attack and before the deployment of Iron Dome, house prices declined by 6.0 percent in the most severely hit localities relative to others in the north, by 3.8 percent per 100 rocket hits and by 4.4 percent per 1,000 claims. By 2015, the gaps narrowed to 3.4 percent, 1.7 percent and 1.9 percent, respectively, further suggesting that the public viewed the Iron Dome system as effective.
3. Were there any challenges encountered with conducting this research and if so, how did you overcome them?
The main challenge we encountered with conducting this research was obtaining data on the intensity of the rocket threat across localities and over time. To our surprise, it turned out that in the past (this is no longer true), no official body, such as the army or the police, collected these data. Eventually, we found a good proxy for the severity of the rocket threat – the number of claims for rocket related damages.
4. Is further research needed and if so, what would you recommend?
There is still much to do in terms of studying the effects of the rocket threat and the effectiveness of various policies aimed at countering it. In this article we focused on the effects on the housing market, but the effects on other markets (e.g. the labor market) and on non-market outcomes (such as education, health, immigration and political attitudes) as well as the effects of other counter measures could also be fruitfully studied.
5. What, if any are the policy implications or recommendations from this research?
Our analysis shows that the Iron Dome system was perceived by the public as effective in countering the rocket threat. Moreover, a back-of-the-envelope cost-benefit analysis we present at the end of the article suggests that the benefits of the system outweigh its costs. This seems to imply that, at the margin, more money should be spent on improving the system and on purchasing additional batteries.