Arnold Kling  

Is Media Bias a Market Failure?

PRINT
Indicators of the New Financia... Credentials and Teacher Qualit...

A couple of readers have raised this issue. If news media are so biased, why does the market not correct this?

My first thought is that there probably is no market for unbiased media. There is definitely a market for hard-core right-wing opinions. There is definitely a market for what we call mainstream media, where both the opinions and the reporting are biased to the left. There is also a market for something like the Washington Post, where the editorials are pretty centrist while the reporting strikes me as showing zero understanding of anything right of center.

One commenter on my earlier post wrote,


I think the notion of cutting teachers' salaries is one of those "unmentionables" in the media. It's like saying "I support the drowning of kittens." People in the media wouldn't touch it with a 50-foot pole.

Forget about left-wing bias or right-wing bias. Why is it that the idea of cutting teacher salaries invokes such a reaction? (I agree with the commenter that it does so.)

The phrase that keeps coming into my head is Robin Hanson's "showing that you care." I think that is what people expect from politicians and the media. Saying that teachers could be paid less really violates the imperative to show that you care.

I suspect that the market for media that does not focus on "caring" is really, really tiny. News organizations have learned to focus on what they call the human-interest angle. Coverage of something like the Olympics is all about getting you to care about these athletes as if you had some big personal stake in what happens.

It would be fine if "showing that you care" had the same effect as caring. But the policies that are undertaken to comply with the imperative to show that you care often hurt the people that you supposedly care about. I give you housing policy as exhibit A, where we set people up to fail, and the people we set up to fail the most were minorities and people with low incomes.


Comments and Sharing





COMMENTS (14 to date)
Dave writes:

The Economist had a piece recently about how unbiased media has been replaced by transparency of biases. Certainly not all media is biased to the left. Murdoch owns outlets that lean right pretty hard.

Faré writes:

Media Bias is not Market Failure: it's Statism Success. You have to give credit to the Establishment for the ONE thing it does well: reproducing itself, thanks to decades of subsidies and censorship at the margin. And in the USA, the relative decentralization of the Establishment only makes it more competitive and more effective at maintaining its grip on the minds of people (compared to the more centralized Establishments of other countries). Yay for decentralization!

Jim Rose writes:

media bias is market success in the market for ideas and criticism because media bias is another name for product differentiation.

Fox Network executives even concede that accusations of bias actually help them; the channel’s dramatic growth in ratings are consistent with this view

A leading characteristic of media bias is that people agree on its existence, but disagree on the sign.

When a news item comprises information that is mostly non-verifiable, consumers may care both about opinion and editorials, and a firm’s report will contain both these aspects—in which case the market resembles any differentiated product market.

when news is not fully verifiable, firms produce reports to cater to viewers with tastes for different opinions.

The combination of partial verifiability and heterogeneous tastes make information behave similarly to any differentiated product, so one could argue that a free press does not eliminate bias for similar reasons that a free market does not lead to one color of cars.

HT: http://www.people.hbs.edu/banand/InformationOpinion.pdf Information or Opinion? Media Bias as Product Differentiation


See also James T. Hamilton, A Market for Press Independence: The Evolution of Nonpartisan Newspapers in the 19th Century

Abstract:

“This paper traces the growth of nonpartisan press coverage as a commercial product by examining newspaper markets in the top 50 cities in America from 1870 to 1900.

The shift from a party press to an independent press is shown to be a function of brand location, market segmentation, economies of scale, technological change, and advertising incentives.”

Editors seeking favors from political parties slant the discussion of government policies.

Newspapers trying to sell space to advertisers tailor the way they cover politics in order to gain more readers to market.

News coverage is sold to the highest bidders, with the bidders including readers, advertisers, and politicians.

Jim Rose writes:

Daniel Sutter has written extensively on the economics of media bias.

He applies concepts such as profit maximisation, customer preferences, cartel stability and defection, and agent-principal problems inside media outlets.

(2011). The Liberal Media or Customer Preferences. Applied Economics. (vol. 43, 47-52).

(2006). Media Scrutiny and the Quality of Public Officials. Public Choice. (vol. 129, (25-40).

(2005) “News Media Incentives, Coverage of Government and the Growth of Government. The Independent Review.

(2001) Can the Media be so Liberal? The Economics of Ideological Media Bias. Cato Journal.

Jim Rose writes:

Dave, i beg to differ on Murdoch owns outlets that lean right pretty hard

Since he established himself as a major newspaper proprietor, Murdoch has unashamedly backed political winners, only to dump them when he was convinced that they were washed up or that his newspapers might be left dangerously stranded on the losing side of politics.

The most notorious example was his brief flirtation with Gough Whitlam, who led the Australian Labor party to power in 1972, displacing the Liberal(conservative) government after 23 years in office.

The circumstances were roughly analogous to those in Britain in 1994: a tired, ailing conservative administration with which voters were disenchanted, and a revamped Labor opposition with a personable, intelligent leader offering new ideas…

To the continuing discomfort of Australian Labor Party MPs, who still remember his turncoat tactics against Whitlam, media barons Murdoch (and Kerry Packer) became embraced as business ‘mates’ of the Labor government during the 1980s.

after Keating’s unexpectedly comfortable australian election triumph in the 1993 Australian federal election, Murdoch’s papers were generous to Labor.

Murdoch’s see-sawing political stances are entirely pragmatic.

He’s always been prepared to back winners just before they win, and to shift allegiances on non-ideological grounds. It’s the gambler in him.

HT: http://www.independent.co.uk/news/world/a-man-of-selfish-loyalties-rupert-murdochs-apparent-overture-to-tony-blair-strikes-a-chilling-chord-among-australian-politicians-he-has-supported-1376362.html

Steve Sailer writes:

"The phrase that keeps coming into my head is Robin Hanson's "showing that you care.""

Good point. For example, Oprah's billion dollar fortune has a lot to do with her inexhaustible ability to show she cares. I don't recall her solving many problems, but she has certainly acted like she cared about an amazing number of problems. (And this is not to pick on Oprah, who has worked hard for her money and is a remarkable professional. She's just the best representative of what works these days in the media.)

Jehu writes:

Do you mean unbiased or do you mean 50th percentile on the American political spectrum--there's a huge difference?
Fox news is honestly right around the 50th percentile of the American public. A news network that is actually unbiased is as hard to imagine as one that was say, 80th-90th percentile towards the right. Fox, probably alone among the major news organs was actually organized primarily to make money (the NYTimes, for instance, is worth considerably less than its physical assets), and being 50th percentile aids in that effort.

David C writes:

So to combine this post with the previous one, you believe voters, or at least political news followers, feel very strongly about the importance of showing that you care, and liberal politicians are able to tap into this feeling in such a way as to avoid criticism? And conservative politicians aren't able to tap into this feeling or others of similar importance, and as a result, the media criticizes them but not liberals? So it's not so much that the media is to the left of the median news viewer, but that Republicans are too far from the median voter while Democrats are very close to it? Or do you believe there is a substantial difference between news viewers and voters as to allow for a bias?

Scott from Ohio writes:

I think there is a market for an unbiased media. If there wasn't, why would Fox News claim to be "fair and balanced"? Why would fans of the liberal media insist so stubbornly that there's no such thing as the liberal media?

The reason biased media still exist is that consumers of media are in a poor position to judge what is truly unbiased. Consumers cannot reliably discern the quality of the product even after they've consumed it, so there's no surprise that we see market failure.

kyle8 writes:

Certainly there is now a conservative leaning media. However, I can easily recall the days when every major magazine, all the networks, and nearly every major newspaper were center-left in their views.

The bias was obvious to anyone who was not on the left and completely invisible to anyone on the left.

Those organs are still biased to the left, perhaps more than ever. But now with alternate media conservatives, and even libertarians have someplace to go for their arguments. The result is a massive market contraction for the main stream (old) media.

The reason Fox and Fox business have grown so much is a classic market movement. If you have only one right of center outlet and dozens that are left of center then of course the one which is right of center will have a larger market share.

Ted writes:

Mullainathan and Shleifer made similar points in their 2005 AER article The Market for News.


On the teacher pay bit, I think Hanson has it partially right, but you have to couple that with something like a Chomsky-Herman propaganda model. I've heard for decades, consistently, that teachers are underpaid, overworked, barely scraping by etc etc. When you look at the actual evidence, they appear to have a ton of time off, relatively short hours, and live a comfortable middle / upper-middle class lifestyle. Everyone seems to buy the propaganda, however. So, when you say we should cut their wages, everyone seems to think you are imposing a big burden on someone who is so overworked and underpaid already. I think this is a broader part of how news outlets can manufacture public opinion, rather than bias per-say, which I view as a slightly different issue.

Ted writes:

Just to follow up on whether media bias is a market failure. If you are willing to buy the Mullainathan-Shleifer model I linked to above, then, no, media bias is not a market failure. I haven't really played with their model at all, but the way MS construct their utility functions and structural preferences I don't see how any Pareto improvement is possible in their model.

Jim Rose writes:

Ted, thanks for the link.

media bias is another name for there being rival hypotheses that account for the always incomplete facts.

why are reporters special and able to say that do or could live in a world free of both ambiguity and dispersed knowledge.

ezra abrams writes:

[Comment removed for name-calling. Email the webmaster@econlib.org to request restoring your comment privileges.--Econlib Ed.]

Comments for this entry have been closed
Return to top