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Neutral Media? Evidence of Media Bias and its Economic Impact


  • Killian J. McCarthy
  • Wilfred Dolfsma


Three major surveys of professional journalists, in 1976, 1986, and 1996, suggest that the vast majority consider themselves to be neutral, objective, and balanced observers, whose role is merely to provide information. But how neutral is the media, in terms of its orientation and effects on the behavior of the markets? In this paper, we unite a number of literatures to suggest that by choosing what event to report, how much and how frequent to report an event, and by choosing what descriptive tone to adopt in their coverage, the media has a non-neutral impact on the economy. We report evidence to suggest that: (1) the media helps set the public agenda, by promoting certain events and causes, for better or for worse; (2) the media influence the public's perception of risk, by disproportionately sensationalizing risk and by emphasizing probable negative consequences over probably positive ones; (3) the media influences elections and their outcomes; (4) the media influences the public's perception of the manager, the reputation of the firm, and the goods that the firm produces; (5) the media shapes consumer sentiment and the consumers' willingness to spend; and (6) the media shapes business sentiment and influences both firm- and market-level behavior. In doing so, we demonstrate conclusively that the media is not neutral: the media alters the public's perception of reality. In other words, we suggest not only that the media reports the news, but also shapes the world in which we live.

Suggested Citation

  • Killian J. McCarthy & Wilfred Dolfsma, 2014. "Neutral Media? Evidence of Media Bias and its Economic Impact," Review of Social Economy, Taylor & Francis Journals, vol. 72(1), pages 42-54, March.
  • Handle: RePEc:taf:rsocec:v:72:y:2014:i:1:p:42-54 DOI: 10.1080/00346764.2013.806110

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    References listed on IDEAS

    1. Sabina Alkire, 2007. "The Missing Dimensions of Poverty Data: Introduction to the Special Issue," Oxford Development Studies, Taylor & Francis Journals, vol. 35(4), pages 347-359.
    2. Boris Branisa & Stephan Klasen & Maria Ziegler, 2009. "The Construction of the Social Institutions and Gender Index (SIGI)," Ibero America Institute for Econ. Research (IAI) Discussion Papers 184, Ibero-America Institute for Economic Research.
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    1. Jeffrey Cohen & Yuan Ding & Cédric Lesage & Hervé Stolowy, 2017. "Media Bias and the Persistence of the Expectation Gap: An Analysis of Press Articles on Corporate Fraud," Journal of Business Ethics, Springer, vol. 144(3), pages 637-659, September.

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