Essays on media reportage and economic behaviour
This thesis looks at the economics of mass media from a variety of perspectives. The main aim is to analyse the key factors that influence media reporting behaviour, and in turn the impact of reportage on individual decision-making processes. The first chapter provides a brief summary of the contextual background of this thesis, by presenting the main points tackled in the subsequent chapters as well as a concise overview of the main contributions across various fields of study. The second chapter explores the relationship between advertisers and the media using a simple model of horizontal and vertical product differentiation in a duopolistic setting. In this framework, when a news story is published one firm will benefit in terms of higher consumer demand and profits, while the other will suffer. Firms can influence the media's decision to publish the news story or withhold it via advertising expenditure. The main result shows that in equilibrium when news signals conform to people's prior beliefs, extreme or strong stories will be withheld from publication by the media. This is because strong stories will result in a drastic decline in profits for one firm, thus providing it with an incentive to switch over and change its production process to mimic the other (beneficiary) firm, thereby eliminating vertical product differentiation. Therefore, the beneficiary firm would have an incentive to ensure that the news story is withheld to prevent this increase in competition and the subsequent erosion of its profit margins. The results provide an alternative rationale to explain recent evidence on under-reporting by the U.S. media in relation to various issues like climate change and the nutritional content of food. The third chapter looks at the responsiveness of individual private behaviour to media coverage of a particular news story. Survey data on charitable gift-giving in the U.S. are used in order to analyse the impact of newspaper coverage of the 2004 Indian Ocean tsunami on both the likelihood and magnitude of monetary disbursements towards the relief effort. The identification strategy employed in this paper exploits differences in county-level growth rates of violent crime in order to account for the variation in newspaper coverage of the tsunami, thus circumventing potential endogeneity problems. The results show that media coverage only had a modest effect on people's decision to donate or not, but conversely had a significant and non-trivial impact on the amount of money donated. Furthermore, this impact was larger for young adults within the 25-34 age bracket and individuals who had undertaken some form of voluntary work in the previous year. These results hold even after the implementation of various robustness tests, and serve to highlight the growing influence of the media on people's behaviour. The final chapter analyses the impact of media reports on electoral outcomes, and in particular the extent to which soft or sensationalist news reportage influences voting. Survey data on individual voting behaviour during the 2000 U.S. Presidential election is used, together with a novel dataset on the amount of coverage afforded to the Monica Lewinsky scandal over the period January 17, 1998 to August 31, 2000. We first show that Lewinsky coverage was not driven by the newspapers' political bias, but rather by other factors including tabloid journalism. This independence enables us to focus solely on the impact of media reports on voting, in contrast to the rest of the literature which deals with the electoral influence of politically-biased media outlets. We then look at how newspaper coverage of the Lewinsky scandal influenced voting patterns in the 2000 U.S. Presidential election. To account for potential endogeneity issues we use county-level variation in the number of deaths caused by extreme weather events as an instrument for Lewinsky articles. We find that media coverage of the scandal had a positive and statistically significant impact on the likelihood of voting for George W. Bush, and conversely a negative influence on the probability of voting for Al Gore: this pattern is visible among both Democrats and Republicans. The results are robust to various tests, and raise several questions regarding the media's role within the democratic process.