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The Impact of Newspapers on Consumer Confidence: Does Spin Bias Exist?

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

Abstract

Mullainathan and Shleifer (2002) 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, reflects the outlet's attempt to simply create a memorable story. Competition between outlets can eliminate the effect of ideologicalbias, but increases the incentive to spin stories. We examine whether spin exists in Dutch newspaper reporting on the state of the economy. If so, we assume that in their reports on the state of the economy newspapers exaggerate. Consumers reading such reports may be influenced by these reports. As a result, consumer confidence may be affected not only by economic fundamentals, but also by the way they 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, but small, impact on consumer confidence, which is short- lived.

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Bibliographic Info

Paper provided by Netherlands Central Bank, Research Department in its series DNB Working Papers with number 011.

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Date of creation: Oct 2004
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Handle: RePEc:dnb:dnbwpp:011

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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. Sydney C. Ludvigson, 2004. "Consumer Confidence and Consumer Spending," Journal of Economic Perspectives, American Economic Association, vol. 18(2), pages 29-50, Spring.
  3. W. Jos Jansen & Niek J. Nahuis, 2002. "The Stock Market and Consumer Confidence: European Evidence," MEB Series (discontinued) 2002-11, Netherlands Central Bank, Monetary and Economic Policy Department.
  4. Sendhil Mullainathan & Andrei Shleifer, 2002. "Media Bias," Harvard Institute of Economic Research Working Papers 1981, Harvard - Institute of Economic Research.
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Cited by:
  1. 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.
  2. Kosse, Anneke, 2011. "Do newspaper articles on card fraud affect debit card usage?," Working Paper Series 1389, European Central Bank.
  3. 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.
  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, 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.
  6. 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.
  7. 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.

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