My AFR column this month is on the economics of media bias. Full text over the fold.
Economics of Media Bias, Australian Financial Review, 17 May 2007
Two years ago, a team of economists from Yale University decided to answer a question that many a journalist has pondered in the pub: does the newspaper you read affect the way you vote? To test the theory, Alan Gerber, Dean Karlan and Daniel Bergan randomly chose one thousand households in the Washington DC area, and gave them a free subscription to either the left-leaning Washington Post or the conservative Washington Times. A few months later, they surveyed both groups â€“ plus a control sample â€“ to see how they voted. The finding? Those who received the Post were 8 percentage points more likely to vote for the Democratic Party. Getting the Times had no impact on how you voted.
In recent times, economists have expanded their research well beyond topics such as macroeconomics and labour markets that have traditionally constituted the bread-and-butter of the discipline. One of the subjects that the new economic imperialism has laid its tentacles upon has been media bias. What impact does the media you consume have on your political behaviour? And how and why do media outlets shape the news?
From a theoretical standpoint, one of the most important contributions has been a paper published last year by two young researchers at the University of Chicago, Matthew Gentzkow and Jesse Shapiro. Contrary to the simple explanation that media bias is driven by the personal predilections of proprietors or journalists, they argue that media slant emerges mainly as a result of outlets trying to tailor their news reporting to consumersâ€™ prior beliefs. For example, people who buy a progressive broadsheet will be more likely to think that it provides accurate news if the newspaper gives a positive spin to Laborâ€™s policy ideas. Similarly, those who listen to a conservative talkshow host will be more likely to tune in the next morning if the host praises the Prime Minister.
In a separate study, Gentzkow and Shapiro set about testing their theory, focusing on media bias in local newspapers. To estimate each newspaperâ€™s bias, they develop a unique index. Searching the 2005 Congressional Record, they identify the phrases most commonly used by Democratic and Republican politicians. Among the top phrases used by Democrats are â€œchange the rulesâ€, â€œbudget deficitâ€, â€œAmerican workersâ€ and â€œveteransâ€™ health careâ€. Among the top phrases used by Republicans are â€œdeath taxâ€, â€œpersonal accountsâ€, â€œprivate propertyâ€ and â€œstem cellâ€. Some of these reflect a concerted effort by political strategists, such as the campaign by Republicans to re-label estate taxes as death taxes, and to refer to personal social security accounts instead of private accounts.
How much of this subtle difference in language was picked up by the media? The duo then look to see which newspapers opt for the Democratsâ€™ favourite phrases, and which outlets tend to use Republican phrases. When writing about tax reform, will the economics correspondent use the Republican phrase â€œtax reliefâ€, or the Democratic phrase â€œtax cuts for the wealthyâ€? Will the international reporter talk about the â€œglobal war on terrorâ€, or the â€œwar in Iraqâ€? Using these subtle differences, they place all local US newspapers on a left-right spectrum. According to this index, the Tri-Valley Herald (circulating in the San Francisco Bay area) is the most left-wing newspaper, while the Houston Chronicle is the most right-wing.
Gentzkow and Shapiro then turn to explaining media slant. Consistent with their theory that media bias is mainly driven by customer tastes, they find that reader ideology explains significantly more of the variation in media bias than the identity of its owner. This finding holds up even when they take account of the possibility of reverse causality. Places with more churchgoers (a trait unlikely to be affected by newspaper bias) tend to have more right-wing newspapers. Conversely, cities with fewer churchgoers tend to have more left-wing newspapers.
So while Gerber, Karlan and Bergan have shown that left-wing newspapers make people more likely to vote for left-wing candidates; Gentzkow and Shapiro demonstrate that in areas with more left-wing people, newspapers are also likely to be more left-wing. These mutually reinforcing results raise the prospect of a vicious cycle, in which the media feeds and reinforces votersâ€™ prejudices. How can we stop it?
Reassuringly to economists, the answer is a familiar one: more media competition. In the 2000 US election, places with a larger number of local television stations tended to give more equal airtime to the two presidential candidates. In the Middle East, countries with more competition between media outlets tend to provide more balanced reporting on politics. The more journalists are reporting on a topic, the less biased each can be.
In the Australian context, this finding has a straightforward implication: policymakers who want to reduce bias should focus on boosting the number of independently owned media outlets, rather than worrying too much about foreign ownership. All the news thatâ€™s fit to print doesnâ€™t come from one source.
Dr Andrew Leigh is an economist in the Research School of Social Sciences at the Australian National University.
I didn’t have room in the op-ed to note that Gentkow, KarlanÂ and Shapiro were all mentioned in January on the NYT’s list of 13 promising young economists to watch. Gentkow and Karlan have made recent visits to Australia – I’m still working on getting Shapiro out to do some talks.