The Scar of Political Conflict: Evidence from Tear Gas Deployments in Hong Kong

Abstract

This study examines how exposure to political violence during the 2019 Hong Kong Anti-ELAB Movement affected high-stake economic decisions. Exploiting the conditional randomness of tear gas deployment location–sites where violence occurred–we compare housing prices near these sites (treatment group) to those farther away (control group), before the protests and after the National Security Law ended the movement. We find that treated apartments sold at discounts following the NSL announcement, with this effect persisting for one year. We provide further evidence that supports a mechanism of violence-induced belief changes rather than changes in amenities or expectations of future violence.