When Does Bad News Stick? Topic-Level Asymmetry in Narrative Dynamics

Isha Agarwal, Wentong Chen and Eswar Prasad

No 35838, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: When does bad news stick? This paper shows that the persistence of media sentiment depends not only on whether news is good or bad, but also on what the news is about. Using the complete Wall Street Journal archive from 1990 to 2025, we construct monthly positive and negative sentiment indices for twelve economic topics and estimate topic-specific sentiment dynamics. Bad-news innovations generate larger cumulative responses than positive-sentiment innovations in every topic, indicating that negativity asymmetry is a broad feature of media sentiment. But the size of this asymmetry varies sharply across topics. The bad-minus-positive persistence gap is largest in security and human rights, firms and corporate strategy, health and public safety, and real estate and financial stability. Bad-news persistence is also sizable in data-rich topics such as financial markets, real estate, and corporate news, suggesting that frequent information arrival does not necessarily lead narratives to revert quickly. These findings show that aggregate sentiment indices mask substantial topic-level heterogeneity in the asymmetric dynamics of narratives, with potential implications for how persistent negative sentiment shapes expectations, asset prices, and real economic outcomes.

JEL-codes: C55 D83 D84 G14 (search for similar items in EconPapers)
Date: 2026-10
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