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

Karel-Jan Alsem, Steven Brakman (), Lex Hoogduin and Gerard Kuper

No 1328, CESifo Working Paper Series from CESifo

Abstract: It is sometimes argued that news reports in the media suffer from biased reporting. 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 ideological bias, but increases the incentive to spin stories. We examine whether we find some evidence of spin in Dutch newspaper reporting on the state of the economy. If newspapers are indeed able to create memorable stories this should, according to our hypothesis, affect the opinion of readers with respect to the state of the economy. Sentiments about the actual state of the economy could be magnified by spin. As a result, consumer confidence – a variable that routinely measures the opinion on the state of the economy – can be expected to be affected not only by economic fundamentals, but also by the way these fundamentals 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 impact on consumer confidence, which is short-lived.

Date: 2004
New Economics Papers: this item is included in nep-cbe, nep-cul, nep-mac and nep-pke
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Citations: View citations in EconPapers (1)

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Journal Article: The impact of newspapers on consumer confidence: does spin bias exist? (2008)
Working Paper: The impact of newspapers on consumer confidence: does spin bias exist? (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1328

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