Which events are newsworthy?
In this paper, Armona et al. explore the determinants of news reporting, focusing on how the newsworthiness of events is assessed and reported by media outlets. The authors develop a model where “a news consumer takes an action whose payoff depends on an unknown state while the news outlet learns the state and can verifiably report its realization to the consumer at a known, random opportunity cost. If the news outlet reports the realization, the consumer takes the ex-post optimal action. If the outlet does not report the realization, then the consumer takes the ex-ante optimal action based on their prior. ” They use the Continuous Ranked Probability Score (CRPS) as a measure of newsworthiness and look at what was reported on nightly national television network news broadcasts from 1968 through 2013. Their key findings on the determinants of reporting include:
- Stock Market Returns: Reporting on stock market returns is highly correlated with the extremity of the returns. The probability of reporting increases significantly with both very high and very low returns.
- Unemployment Rate: Reporting on the unemployment rate is more likely when the rate is high or when there are large changes in the rate.
- US Military Casualties: Reporting on US military casualties in Iraq and Afghanistan is more likely on days with higher casualties.
The findings suggest that media outlets are more likely to report on events that are surprising or extreme, as these are deemed more newsworthy. This model provides a framework for future studies to assess media bias and the determinants of news reporting in a systematic and quantifiable manner.
What is Newsworthy? Theory and Evidence
Authors: Luis Armona, Matthew Gentzkow, Emir Kamenica, Jesse M. Shapiro
From: Harvard University, Stanford University, University of Chicago
On misinformation and disinformation
The paper “Robust Theory and Fragile Practice: Information in a World of Disinformation” by Joseph E. Stiglitz and Andrew Kosenko explores the complexities of information dissemination and its implications in modern economies, particularly focusing on the challenges posed by misinformation and disinformation. The authors delve into the theoretical underpinnings of information economics and contrast them with real-world practices, emphasizing the role of social media and the behavioral responses to information.
- Asymmetric Information: The paper discusses the role of asymmetric information in markets, where one party has more or better information than the other. This asymmetry can lead to market inefficiencies and necessitates modeling the endogenous nature of information asymmetries.
- Screening and Signaling: The authors explore the actions that uninformed parties can take to extract information from informed parties (screening) and the strategies that informed parties use to convey or withhold information (signaling).
- Government Role: The paper highlights the importance of government policies in regulating information disclosure and the transparency of government-held information.
- Cheap Talk and Bayesian Persuasion: The paper surveys theoretical models such as cheap talk (costless communication) and Bayesian persuasion (strategic information disclosure) to understand how information can be credibly transmitted even when it is unverifiable.
- Information Design: The concept of information design is discussed, where an informed party strategically decides what information to disclose to influence the actions of others. This includes both verifiable and non-verifiable information.
- Behavioral Economics: The authors emphasize the limitations of traditional rational models in explaining the spread and impact of misinformation. They argue that behavioral biases, such as confirmatory bias and the framing of information, play significant roles.
- Social Media: The role of social media in amplifying misinformation is critically examined. The paper discusses how algorithms designed to maximize engagement can lead to the rapid spread of false information, contributing to societal polarization.
- Regulation of Information: Stiglitz and Konsenko call for stronger regulations to combat misinformation, including laws against fraud and false advertising. They argue for increased transparency in information dissemination and the need for mechanisms to hold information providers accountable for the accuracy of their information. They call for a multidisciplinary approach to address the challenges of misinformation, incorporating insights from economics, psychology, and legal studies to design effective policies and regulations.
What was supposed to be the information age has become the “dis and misinformation” age, with sustained dis and misinformation – often seemingly inconsistent with the economists’ standard model of rationality. This surfeit of mis and disinformation has had marked effects on economics, politics, and society. Abundance of information has its perils.
Robust Theory and Fragile Practice: Information in a World of Disinformation Part 2: Direct Communication
Authors: Joseph E. Stiglitz, Andrew Kosenko
From: Columbia University, Marist College
