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The impact of newspapers on consumer confidence: does spin bias exist?

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Author Info

  • Karel Jan Alsem
  • Steven Brakman
  • Lex Hoogduin
  • Gerard Kuper

Abstract

It is sometimes argued that news reports in the media suffer from biased reporting. Mullainathan and Shleifer (2002, 2005) argue that there are two types of media bias. One bias, called ideology, reflects a news outlet's desire to affect reader opinions in a particular direction. The second bias, referred to as 'spin' or 'slanting', reflects the outlet's attempt to simply create a memorable story. Competition between outlets can eliminate the effect of ideological bias, but increases the incentive to spin or slant stories. We examine whether we find some evidence of spin in Dutch newspaper reporting on the state of the economy. If newspapers are indeed able to create memorable stories this should, according to our hypothesis, affect the opinion of readers with respect to the state of the economy. Sentiments about the actual state of the economy could be magnified by spin. As a result, consumer confidence-a variable that routinely measures the opinion on the state of the economy-can be expected to be affected not only by economic fundamentals, but also by the way these fundamentals are reported. We construct a variable that reflects the way consumers perceive economic news reported in newspapers. We find that this variable indeed has a significant impact on consumer confidence, which is short-lived.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/00036840600707100
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 40 (2008)
Issue (Month): 5 ()
Pages: 531-539

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Handle: RePEc:taf:applec:v:40:y:2008:i:5:p:531-539

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References

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  1. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.
  2. Sendhil Mullainathan & Andrei Shleifer, 2002. "Media Bias," Harvard Institute of Economic Research Working Papers 1981, Harvard - Institute of Economic Research.
  3. Jansen, W. Jos & Nahuis, Niek J., 2003. "The stock market and consumer confidence: European evidence," Economics Letters, Elsevier, vol. 79(1), pages 89-98, April.
  4. Sydney C. Ludvigson, 2004. "Consumer Confidence and Consumer Spending," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 29-50, Spring.
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Cited by:
  1. Anneke Kosse, 2012. "Do newspaper articles on card fraud affect debit card usage?," DNB Working Papers 339, Netherlands Central Bank, Research Department.
  2. Ramalho, Esmeralda A. & Caleiro, António & Dionfsio, Andreia, 2011. "Explaining consumer confidence in Portugal," Journal of Economic Psychology, Elsevier, vol. 32(1), pages 25-32, February.
  3. Marcel Garz, 2012. "Job Insecurity Perceptions and Media Coverage of Labor Market Policy," Journal of Labor Research, Springer, vol. 33(4), pages 528-544, December.
  4. Hollanders, D.A., 2012. "The effect of aging on pensions," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5556748, Tilburg University.
  5. Hollanders, D.A. & Vliegenthart, R., 2009. "The Influence of Negative Newspaper Coverage on Consumer Confidence: The Dutch Case," Discussion Paper 2009-55, Tilburg University, Center for Economic Research.
  6. Hollanders, David & Vliegenthart, Rens, 2011. "The influence of negative newspaper coverage on consumer confidence: The Dutch case," Journal of Economic Psychology, Elsevier, vol. 32(3), pages 367-373, June.
  7. Hatzinikolaou, Dimitris, 2010. "How to Turn a Recession into a Depression: The Role of the Media, of the Politicians, and of the Political Analysts," MPRA Paper 45391, University Library of Munich, Germany, revised 15 Sep 2010.

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