The Impact of Newspapers on Consumer Confidence: Does Spin Bias Exist?
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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- Sendhil Mullainathan & Andrei Shleifer, 2002.
Harvard Institute of Economic Research Working Papers
1981, Harvard - Institute of Economic Research.
- Sendhil Mullainathan & Andrei Shleifer, 2005.
"The Market for News,"
American Economic Review,
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"The Stock Market and Consumer Confidence: European Evidence,"
MEB Series (discontinued)
2002-11, Netherlands Central Bank, Monetary and Economic Policy Department.
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- 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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