An economics prize tells us something very worrying about the news business, and ourselves

By Tim Worstall , written on April 18, 2014

Published to the News desk.

They've just handed out this year's John Bates Clark Gold Medal over at the American Economics Association. The research for which its been given should be of great interest to everyone worried about the media and journalism.

The JCB is actually harder to win than the Nobel, given that there's only one each year (it's never been awarded to multiple holders, unlike the Nobel which can have three) and it's also only for American economists under 40. The interest in this year's comes from the fact that it has been awarded largely for research into the media itself.

Most importantly for us, the finding that the media chases the preconceptions and prejudices of the audience, not shapes them. Here's the AEA report on it:

A first set of Gentzkow’s papers studies political bias in the news media. In “What Drives Media Slant? Evidence from U.S. Daily Newspapers” (Econometrica, 2010), Gentzkow and co-author Jesse Shapiro use textual analysis of a large set of newspaper articles to classify content as more Republican or more Democrat (“media slant”). This is done using statistical analysis of phrases that differentially show up in Republican versus Democrat Senators’ speeches in the Senate. These constructed measures of media slant match well with conventional wisdom and with other, more ad-hoc and subjective newspaper political classification. Gentzkow and Shapiro then use these measures to estimate demand for newspapers, and to model the newspaper owner’s choice of media slant. They find that most of a newspaper’s media slant can be explained by the preferences of its readers rather than by the tastes of its owner. The second part of the paper tries to sort out whether the bias of individual papers is driven by “demand” – i.e. the political biases of their target audience – or “supply”, i.e. the idiosyncratic preferences of the owners. They find that it is mostly demand.
That is rather something that gets us media types excited. You know, the what if the billionaires buy up all the newspapers worries. And the answer is that if those billionaires want to stay in business then they'll not be able to use the newspapers to propagandise in favour of leaving billionaires alone. That's simply not how we consumers choose what we're going to consume. Rather, we have certain ideas about how the world works and we like our media consumption to bolster those views rather than anything so boring as trying to educate us out of them.

This also has interesting implications for our observations of the wider society. For example, there's a very small press that caters to those demanding the immediate overthrow of capitalism. And the corollary of this being a very small press is that there's very few Americans who actually want to read this stuff: leading to the thought that there's very few who share this worldview. Something we can all be grateful for. Sadly, the other side of this is that the success of Fox News and the like shows us not that Murdoch is brainwashing the masses but that a startlingly large number of Americans share those prejudices and wish to have them reconfirmed on a daily basis. That's a less comforting thought.

Things are different for people in verticals like us here at Pando: we're not trying to push any particular political line, however much individual writers might have views on the subject. But out there in the general news business we don't have to worry about the media persuading people into policies favoured by the media moguls. Quite the other way around, said moguls are spending their time trying to work out the prejudices of the consumers so that they can pander to them.

Which leaves one final chilling thought. The existence of successful shows like Max Keiser or Alex Jones tells us something we might not be too keen on about our fellow citizens.

[illustration by Brad Jonas for Pando]