Department of Economics Massachusetts Institute of Technology(MIt Working Paper No. 02-33 Institute for Economic research Harvard University Institute Research Working Paper No. 1981 Media bias Sendhil mullainathan MIT, NBER Andrei shleifer Harvard University; NBER This paper can be downloaded without charge from the Social Science Research Network Electronic Paper Collection at http://ssrn.com/abstractid=335800
Department of Economics Massachusetts Institute of Technology (MIT) Working Paper No. 02-33 Institute for Economic Research Harvard University Institute Research Working Paper No. 1981 Media Bias Sendhil Mullainathan MIT; NBER Andrei Shleifer Harvard University; NBER This paper can be downloaded without charge from the Social Science Research Network Electronic Paper Collection at: http://ssrn.com/abstract_id=335800
Media bias Sendhil mull Andrei shleifer (MIT and NBeR (Harvard University and NBER) October 1. 2002 abstract There are two different types of media bias. One bias, which we refer to as ideology, cts a news out lets desire to affect reader opinions in a particular direct ion. The second bias, which we refer to as spin, reflect s the out let's attempt to simply create a memorable story. We examine compet it ion among media out lets in the presence f these biases. Whereas compet it ion can eliminate the effect of ideological bias, it act ually exaggerates the incentive to spin stories. We are extremely grateful to Alberto Alesina, Gene D'Avolio, Ed Glaeser, Simon Johnson, Larry Katz and richard Posner for comments. e-mail: mullain @mit. e du and ashleifergharvard edu
Media Bias Sendhil Mullainathan (MIT and NBER) Andrei Shleifer (Harvard University and NBER) October 1, 2002 Abstract There are two di erent types of media bias. One bias, which we refer to as ideology, re ects a news outlet's desire to a ect reader opinions in a particular direction. The second bias, which we refer to as spin, re ects the outlet's attempt to simply create a memorable story. We examine competition among media outlets in the presence of these biases. Whereas competition can eliminate the e ect of ideological bias, it actually exaggerates the incentive to spin stories. We are extremely grateful to Alberto Alesina, Gene D'Avolio, Ed Glaeser, Simon Johnson, Larry Katz and Richard Posner for comments. e-mail: mullain@mit.edu and ashleifer@harvard.edu. 1
1 Introduction The descript ive account s of the media industry(Mencken 1975, Goldberg 2002), as well as journalism text books(Jamieson and Campbell 2002) recognize that media out lets do not just report plain facts. One commonly noted bias in report ing is ideological During President Clinton's impeachment trial the right-leaning media supported im- peachment, arguing that even a small lie in a civ il deposit ion const it utes a ma jor crime The left-leaning media, in contrast, saw the trial as a wit ch-hunt, treating the very same violat ions condemned by the conservat ive press as trivial. Another, perhaps less com- monly noted, bias is not ideological at all, but rather results from the need to tell a memorable story. Thus bot h the conservat ive and the liberal media condemned Wen Ho Lee as a Chinese spy, wit hout entert aining the possibility that he was scape-goated by dishonest officials The media were surely biased, and probably wro In this paper, we draw a sharp analytical dist inct ion between these two kinds of biased report ing. We call the tradit ional left or right bias ideology, and the less tradi tional bias- one based on the need to tell a story - spin. We see ideology as coming direct ly from the preferences of eit her editors porters For example, left wing newspapers may simply prefer to report news one way. We see spin, on the ot her hand,as coming from a new spaper's attempt to tell a simple and memorable story The act of simplication leads to bias since some informat ion is necessarily discarded. We examine the consequences of bot h ideology and spin for the accuracy of news re- Our principal interest is how compet ition affect s accuracy even wit h competition, the truth may not always come out, especially when spin We consider the case of private media out lets maxin t he we fare of t heir owners which depends on ideology and profits. We begin with the case of a monopoly news supplier. We est ablish that, wit h Bayesian readers, only the ideology of the media out let is a source of bias in reporting. But we also consider the case of readers who are categorical thinkers- have limited memory, and can only remember the"bottom line. This psy chological assumption allows us to analy ze the commonly noted need
1 Introduction The descriptive accounts of the media industry (Mencken 1975, Goldberg 2002), as well as journalism textbooks (Jamieson and Campbell 2002) recognize that media outlets do not just report plain facts. One commonly noted bias in reporting is ideological. During President Clinton's impeachment trial, the right-leaning media supported impeachment, arguing that even a small lie in a civil deposition constitutes a ma jor crime. The left-leaning media, in contrast, saw the trial as a witch-hunt, treating the very same violations condemned by the conservative press as trivial. Another, perhaps less commonly noted, bias is not ideological at all, but rather results from the need to tell a memorable story. Thus both the conservative and the liberal media condemned Wen Ho Lee as a Chinese spy, without entertaining the possibility that he was scape-goated by dishonest ocials. The media were surely biased, and probably wrong. In this paper, we draw a sharp analytical distinction between these two kinds of biased reporting. We call the traditional left or right bias ideology, and the less traditional bias - one based on the need to tell a story { spin. We see ideology as coming directly from the preferences of either editors or reporters. For example, left wing newspapers may simply prefer to report news one way. We see spin, on the other hand, as coming from a newspaper's attempt to tell a simple and memorable story. The act of simplication leads to bias since some information is necessarily discarded. We examine the consequences of both ideology and spin for the accuracy of news reporting. Our principal interest is how competition a ects accuracy. We show that, even with competition, the truth may not always come out, especially when spin is important. We consider the case of private media outlets maximizing the welfare of their owners, which depends on ideology and pro ts. We begin with the case of a monopoly news supplier. We establish that, with Bayesian readers, only the ideology of the media outlet is a source of bias in reporting. But we also consider the case of readers who are categorical thinkers - have limited memory, and can only remember the \bottom line." This psychological assumption allows us to analyze the commonly noted need 2
by media out lets to tell a memorable story, the so-called"narrat ive imperative". With categorical readers, it pays the monopolist news supplier to spin the news in order to make them memorable even in the absence of any ideology. This spin -the need to tell the story orting b The m nteresting issues arise when we consider compet ition among media out- lets. Such compet it ion is an import ant argument for free press: despite the ideolog ical biases of individual news suppliers, the truth comes out through competit ion. We show that,with Bayesian readers, this is indeed the case: competition undoes the biases from ideology. Wit h readers who are categorical thinkers, however, the conse quences of competit ion are more complex. We show that, in the absence of ideology, compet ition act ually reinforces the adverse effect s of spin on accuracy. Not only do the media out let s bias news reporting, but the stories reinforce each ot her. As each paper pins stories, it increases the incentives of later outlet s to spin. This piling on of storie neans non-ideological compet ition worsens the bias of spin. Moreove In can exac- erbate the influence of one-sided ideo logy. When the first news out let that uncovers the story is ideological and later ones are not, the first one sets the tone and later ones his spin. This can explain why and how inside s leak infor mat ion t news out let s: their principal mot ivat ion is to control how t he story is event ually spun. Our the ting falls between t is that readers demand, and media outlet s supply, pure informat ion about polit ical and economic market s, and thereby facilit ate better consumer and voter choice(Coase 1974, Besley and Burgess 2001, Besley and Prat 2002, Djankov et al. 2002, Stromberg 2001, Dyck and Zingales 2002). The opposite but also plausible view, pursued by Mencken(1920) and Jensen(1976), sees the medi grounding in reality. The perspect ive of t his paper is that media out let s provide neit her unadulterated infor mation, nor pure entertainment. News out let s may be biased for ideological reasons. And consumers, while not desiring pure entert ainment as might be the case wit h sensational or human int erest stories, do indirect ly affect news content Dyck and Zignales(2002)go further and examine how private incentives might bias corporate news
by media outlets to tell a memorable story, the so-called \narrative imperative". With categorical readers, it pays the monopolist news supplier to spin the news in order to make them memorable even in the absence of any ideology. This spin - the need to tell the story - is also a source of reporting bias. The more interesting issues arise when we consider competition among media outlets. Such competition is an important argument for free press: despite the ideological biases of individual news suppliers, the truth comes out through competition. We show that, with Bayesian readers, this is indeed the case: competition undoes the biases from ideology. With readers who are categorical thinkers, however, the consequences of competition are more complex. We show that, in the absence of ideology, competition actually reinforces the adverse e ects of spin on accuracy. Not only do the media outlets bias news reporting, but the stories reinforce each other. As each paper spins stories, it increases the incentives of later outlets to spin. This piling on of stories means non-ideological competition worsens the bias of spin. Moreover, spin can exacerbate the in uence of one-sided ideology. When the rst news outlet that uncovers the story is ideological and later ones are not, the rst one sets the tone and later ones reinforce this spin. This can explain why and how inside sources leak information to news outlets: their principal motivation is to control how the story is eventually spun. Our theory of news reporting falls between two extremes. The traditional view is that readers demand, and media outlets supply, pure information about political and economic markets, and thereby facilitate better consumer and voter choice (Coase 1974, Besley and Burgess 2001, Besley and Prat 2002, Djankov et al. 2002, Stromberg 2001, Dyck and Zingales 2002).1 The opposite but also plausible view, pursued by Mencken (1920) and Jensen (1976), sees the media as entertainment, with no obvious grounding in reality. The perspective of this paper is that media outlets provide neither unadulterated information, nor pure entertainment. News outlets may be biased for ideological reasons. And consumers, while not desiring pure entertainment as might be the case with sensational or human interest stories, do indirectly a ect news content 1Dyck and Zignales (2002) go further and examine how private incentives might bias corporate news reporting. 3
because of how they process informat ion. So for reasons of ideology news out lets may bias informat ion to please their owners, and for reasons of consumer psy chology they may bias the informat ion to please t heir readers These results have significant implicat ions for media accuracy. They explain, particular, how the media in the aggregate are likely to get to the bottom of a news story with significant ideological dimension. Ideological diversity serves as a safeguard against spin. Our results are consistent wit h Richard Posner's(1999)highly favorable assessment of the press in the coverage of the Clinton affair. Our result s also show why media bias is most severe in the cases where no or litt le ideological diversity bears on the story, such as the invest igat ion of Wen Ho Lee. In this case, the bias comes from spin, and spin causes the followers to pile on. Competit ion among media out lets is not a solut ion to the problem of spin- indeed, it makes the problem worse. Our paper makes the case for extreme ideological diversity in the media- in such diversity lies the best he 2 Model setup There are two players: the newspaper and the reader. The newspaper is eit her good or bad A good newspaper has access to some information that the reader wants. A bad newspaper, on the ot her hand, has no useful informat ion. The reader uses the newspaper to improve his estimate of some value t. We begin by assuming that t a single real number. This value could be many things: for example, the quality of a polit ician or the financial health of a firm. The common prior is t NN(0, 0), i.e. t is normally distributed wit h variance o2 There are three periods. In the first period, t he reader receives a signal r about the trut h. This signal reflect s the reader's prejudice about the topic before he reads At a more general level, this paper is part of a broader literature on the interaction between competition and individual psy chology, e.g. Russell and Thaler(1985), De Long et. al.(1990) and Camerer(1998 3For simplicity, we use this terminology of " ne wspaper"and"reader"but nothing we di scuss is specific A A bad newspaper cannot m anufacture stories to appear good. We use the se two ty pes merely as a way to model the incentives of the good newspaper to create memorable stories. If no stories are remembered the newspaper is per ceived to be bad and loses subscribers
because of how they process information. So for reasons of ideology news outlets may bias information to please their owners, and for reasons of consumer psychology they may bias the information to please their readers. These results have signi cant implications for media accuracy. They explain, in particular, how the media in the aggregate are likely to get to the bottom of a news story with signi cant ideological dimension. Ideological diversity serves as a safeguard against spin. Our results are consistent with Richard Posner's (1999) highly favorable assessment of the press in the coverage of the Clinton a air. Our results also show why media bias is most severe in the cases where no or little ideological diversity bears on the story, such as the investigation of Wen Ho Lee. In this case, the bias comes from spin, and spin causes the followers to pile on. Competition among media outlets is not a solution to the problem of spin - indeed, it makes the problem worse. Our paper makes the case for extreme ideological diversity in the media - in such diversity lies the best hope against spin.2 2 Model Setup There are two players: the newspaper and the reader.3 The newspaper is either good or bad. A good newspaper has access to some information that the reader wants. A bad newspaper, on the other hand, has no useful information.4 The reader uses the newspaper to improve his estimate of some value t. We begin by assuming that t is a single real number. This value could be many things: for example, the quality of a politician or the nancial health of a rm. The common prior is t N(0; 2 ), i.e. t is normally distributed with variance 2 . There are three periods. In the rst period, the reader receives a signal r about the truth. This signal re ects the reader's prejudice about the topic before he reads 2At a more general level, this paper is part of a broader literature on the interaction between competition and individual psychology, e.g. Russell and Thaler (1985), De Long et. al. (1990) and Camerer (1998). 3For simplicity, we use this terminology of \newspaper" and \reader" but nothing we discuss is speci c to this medium. Our analysis applies to news outlets generally speaking. 4A bad newspaper cannot manufacture stories to appear good. We use these two types merely as a way to model the incentives of the good newspaper to create memorable stories. If no stories are remembered the newspaper is perceived to be bad and loses subscribers. 4