Media Bias On The Economy

Why, when economic data say the economy is doing fine and small business owners (who create 7/10 new jobs) are confident about the economy do the majority of Americans still believe we are in a recession? An AEI study looked at just that question:

Economists have been puzzled this year by the persistence with which perceptions about the economy have lagged behind the economic data. For the most recent 12-month period for which we have data, for example, the economy grew almost exactly as fast as it did during the best 12-month period during President Clinton's two terms. But the economic mood of the country has been much different.

It isn't just the economy that influences people's perceptions. In research we just released, we find that media coverage is also an important determinant. We found that newspaper headlines reporting economic news on unemployment, gross domestic product (GDP), retail sales, and durable goods tended to be much more frequently negative when a Republican was in the White House. And this was true even after accounting for the economic numbers on which the stories were based and how those numbers were changing over time.

We also found that positive headlines explained whether people thought that the economy was getting better more than the economic variables themselves. Newspapers are indeed important.

But of course we all know that there is no such thing as media bias. The AEI study attempted to classify media coverage by looking at headlines:

Headlines are relatively easy to classify since they say things are getting better, worse or mixed. For example, on Jan. 31, the government reported that the real GDP had grown 4 percent in the fourth quarter of 2003. The New York Times covered this, appropriately, as good news, writing the headline, "Economy remained strong in 4th quarter, U.S. reports." At the same time, the Chicago Tribune wrote that "GDP growth disappoints; job worries linger." Headlines are so divergent, it's sometimes hard to believe they are referring to the same event.

Actual economic data explains much about the headlines--but far from everything. We found that the incidence of positive coverage during Republican presidencies was fairly steady--but economic news under President Clinton received by far the most positive coverage. This partisan gap or bias (the difference in positive headlines between Republicans and Democrats for the same underlying economic news) consistently implied that Democrats got between 10 and 20 percentage points more positive headlines.

We also examined individual newspapers. Among the top 10 papers, we found strong evidence that the Associated Press, the Chicago Tribune, the New York Times, and the Washington Post were much more likely to have positive headlines for Democrats even with the same economic news. The New York Post showed no statistically significant difference. The Los Angeles Times did not tend to treat Republicans and Democrats significantly differently.

Even including the Los Angeles Times, Ronald Reagan, a president who presided over one of the most vigorous economies in our history, still received seven percent fewer positive news stories than Clinton after accounting for the different economic conditions.

This is an interesting phenomenon. I heard on the radio in California about a similar study that examined why the American public continued to view President Clinton's perjury and obstruction of justice so indulgently. The study looked at the media's coverage of the story, examining whether news stories reported the charges straightly, or included editorial commentary such as "unfounded charges", "Republican witch-hunt", "smear attempt", "partisan charges", etc. The study concluded that editorializing on the part of the media was, in effect, telling the public that the charges themselves were unfounded. This was surprising since Mr. Clinton was later disbarred by the Arkansas Bar Association for the exact same offenses.

So a lesser authority, looking at the same evidence (presumably with no partisan motivation) found clear and convincing evidence of his guilt, sufficient to take away his ability to practice law. Yet the media, by casting aspersions on the motivation of the accusers in Mr. Clinton's impeachment hearings, effectively told the public it was safe to ignore the evidence. The study, conducted by a British university, concluded that the US media had biased the perceptions of the public by inserting editorial commentary into their reporting.

It would appear that this is still going on with the economic news.

- Cassandra