The Crumbling Hidden Wall: towards an Economic Theory of Journalism

While economic theory has been applied to fields such diverse as religion, arts, law and crime in past years, journalism has until recently remained a blind spot of economic analysis. Media economists may have described media markets, but few economists so far have studied self‐interested journalists as actors in information‐attention markets. Frequently, it is still assumed that journalists serve the public, strive for objectivity in their news products, and seek to act as a ‘fourth estate’ in democracy. We consider this a ‘nirvana approach’ to journalism, and we seek to demonstrate instead that media content is severely influenced by rational journalists' and other communication professionals' self interests. In this paper we outline an Economic Theory of Journalism, referring to the few scholars of economics and of mass communication who have, explicitly or implicitly, used economic theory as an analytical tool to analyze journalism. We argue that economic concepts like principal‐agent theory, free‐riding, external effects, the tragedy of the commons, and the tyranny of small decisions can fruitfully be applied in order to provide more in‐depth explanations of often‐criticized developments in journalism such as the rising influence of PR and spin doctors on journalism, ‘pack reporting’, and ‘horse‐race journalism’. We conclude that an Economic Theory of Journalism will enable both economists and scholars of journalism to identify and predict more systematically the failures of journalism, the excesses and the blind spots of media coverage, and we claim that economics and mass communications need to observe and to inspire each other more closely in the future.