Monday, November 1, 2010
Truth in Media: Competition and Truth in the Market for News
Research by Matthew Gentzkow and Jesse M. Shapiro
Matthew Gentzkow is Professor of Economics and Neubauer Family Faculty Fellow at the University of Chicago Booth School of Business.
Jesse M. Shapiro is Professor of Economics and Robert King Steel Faculty Fellow at the University of Chicago Booth School of Business.
Competition between news outlets can bring their audience closer to the truth, but consumers' own preference for news that is more entertaining than informative may push them further away.
If news outlets fail to report the truth, can more competition in news markets help? The more points of view that are heard and defended, the more likely that people's beliefs will converge to the truth. However, many have questioned whether press competition is truly beneficial. Some cite Britain's BBC as an example of a high-quality public news network that is insulated from traditional product market competition. Others have argued that increased market pressure can sometimes lead to cutbacks in reporting and editorial quality and that falsehoods can persist for a long time despite intense competition among news outlets.
To evaluate to what extent competition leads to more accurate reporting, a study titled "Competition and Truth in the Market for News" by Chicago Booth professors Matthew Gentzkow and Jesse M. Shapiro brings together evidence from the authors' own work as well as other research on how increasing the number of independently owned media firms can affect various distortions that keep news outlets from reporting the truth. These distortions can come from either the supply side or the demand side of the media market.
Without competition, governments can manipulate the news and news providers can manipulate their audience by promoting their own agendas. Moreover, a media outlet with few or no competitors will have little incentive to invest in providing timely and accurate coverage. As a result, competition can help promote press independence, diversity of views, and investment in quality reporting by providing incentives that remove such supply-side distortions.
On the other hand, the power of competition to discipline biases that originate from the demand side of the news market is more ambiguous. If consumers actually prefer biased news because it confirms their prior beliefs or if they demand less socially relevant news—such as car chases and celebrity scandals—then competition may actually exacerbate these preferences by providing only the kind of news coverage that people want.
This is especially true if consumers read or listen to news that "slants" to their beliefs partly out of a desire to be entertained. On the other hand, if consumers choose like-minded sources because they truly believe that these are more accurate, then competition can still keep media outlets somewhat honest if they know that a rival firm can expose them for reporting something that is too far from the truth.
The idea that giving consumers what they want may lead to an abundance of less socially relevant news may be a powerful argument against competition in the media. While this cost must be weighed against the benefits of preserving independence and diversity of views in the press, it is unclear that a regulatory agency would be successful at making people consume the type of news that the government deems important. "That would rely on government doing a better job of figuring out what news people should hear and then forcing them to hear that news," says Gentzkow. "It is not obvious that the government is going to be very good at that."
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Posted by Yulie Foka at 2:24 PM