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Persistent Media Bias

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  • Baron, David P.

    (Stanford U)

Abstract

The news media plays an essential role in society, but surveys indicate that the public views the media as biased. This paper presents a theory of media bias that originates with private information obtained by journalists through their investigations and persists despite profit-maximizing news organizations and rivalry from other news organizations. Bias has two effects on the demand for news. First, rational individuals are more skeptical of potentially biased news and thus rely less on it in their decision-making. Second, bias makes certain stories more likely than others. This paper presents a supply-side theory in which bias originates with journalists who have career interests and are willing to sacrifice current wages for future opportunities. News organizations can control bias by restricting the discretion allowed to journalists, but granting discretion and tolerating bias can increase profits. The skepticism of individuals reduces demand and leads the news organization to set a lower price for its publication the greater is the bias it tolerates. Lower quality news thus commands a lower price. Bias is not driven from the market by a rival news organization nor by a news organization with an opposing bias. Moreover, bias can be greater with competition than with a monopoly news organization. If individuals collectively choose regulation in place of their individual decision-making, bias increases the expected stringency of regulation.

Suggested Citation

  • Baron, David P., 2004. "Persistent Media Bias," Research Papers 1845r, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:1845r
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    File URL: http://gsbapps.stanford.edu/researchpapers/library/RP1845R.pdf
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    References listed on IDEAS

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    1. Puglisi Riccardo, 2011. "Being The New York Times: the Political Behaviour of a Newspaper," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-34, April.
    2. Scott Stern, 1999. "Do Scientists Pay to Be Scientists?," NBER Working Papers 7410, National Bureau of Economic Research, Inc.
    3. Tim Groseclose & Jeffrey Milyo, 2005. "A Measure of Media Bias," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1191-1237.
    4. David P. Baron, 2005. "Competing for the Public Through the News Media," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(2), pages 339-376, June.
    5. Bovitz, Gregory L & Druckman, James N & Lupia, Arthur, 2002. "When Can a News Organization Lead Public Opinion? Ideology versus Market Forces in Decisions to Make News," Public Choice, Springer, vol. 113(1-2), pages 127-155, October.
    6. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.
    7. David Strömberg, 2004. "Mass Media Competition, Political Competition, and Public Policy," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 265-284.
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    Citations

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    Cited by:

    1. Riccardo Ferretti & Francesco Pattarin, 2008. "Is public information really public? The role of newspapers," Centro Studi di Banca e Finanza (CEFIN) (Center for Studies in Banking and Finance) 08013, Universita di Modena e Reggio Emilia, Dipartimento di Economia "Marco Biagi".
    2. Timothy Besley & Andrea Prat, 2006. "Handcuffs for the Grabbing Hand? Media Capture and Government Accountability," American Economic Review, American Economic Association, vol. 96(3), pages 720-736, June.
    3. Matthew Ellman & Fabrizio Germano, "undated". "What Do the Papers Sell?," Working Papers 149, Barcelona Graduate School of Economics.
    4. Stefano DellaVigna & Ethan Kaplan, 2007. "The Fox News Effect: Media Bias and Voting," The Quarterly Journal of Economics, Oxford University Press, vol. 122(3), pages 1187-1234.
    5. Corneo, Giacomo, 2006. "Media capture in a democracy: The role of wealth concentration," Journal of Public Economics, Elsevier, vol. 90(1-2), pages 37-58, January.
    6. Sendhil Mullainathan & Andrei Shleifer, 2005. "The Market for News," American Economic Review, American Economic Association, vol. 95(4), pages 1031-1053, September.
    7. Bernhardt, Dan & Krasa, Stefan & Polborn, Mattias, 2008. "Political polarization and the electoral effects of media bias," Journal of Public Economics, Elsevier, vol. 92(5-6), pages 1092-1104, June.
    8. Elena Panova, 2009. "Confirmatory News," Cahiers de recherche 0912, CIRPEE.
    9. Daron Acemoglu & Victor Chernozhukov & Muhamet Yildiz, 2006. "Learning and Disagreement in an Uncertain World," NBER Working Papers 12648, National Bureau of Economic Research, Inc.
    10. Tim Groseclose & Jeffrey Milyo, 2005. "A Measure of Media Bias," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1191-1237.

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