Wednesday, July 25, 2007

Newspapers and the market test 

Monday I spent an hour on CQ Radio with my good friend Ed discussing a poll result on media bias. (Ed's discussion.) Yesterday I got the new NBER Reporter, which had as its lead article a summary of the paper by Matthew Gentzkow and Jesse Shapiro titled, "What Drives the Political Slant of Daily Newspapers?" They compared the language used by newspapers and the language used by politicians, arguing that newspapers that favor liberals will use phrases that are used by liberal politicians, and newspapers that favor conservatives will use phrases used more often by conservative politicians.
An illuminating example is the partisan divide over the tax on inherited wealth. In 2005, congressional Republicans, who generally oppose the tax, described it as a "death tax" 365 times, using the term "estate tax" only 46 times. Democrats did the reverse, saying "death tax" 35 times and "estate tax" 195 times. Similarly, the more liberal Washington Post used "estate tax" 10 times more often than it used death tax; the more conservative Washington Times used "estate tax" only twice as often.
Examining over 400 newspapers they find something quite interesting. The ideology of the owner of a newspaper doesn't seem to matter as much as the political views of the community the newspaper serves:
When a single owner owns multiple papers, the authors find that each paper's language is tailored to its own market, rather than toeing a single, corporate line. Their data also show no significant relationship between a newspaper's slant and the political contributions made by its corporate owner. What instead has a big impact on newspaper bias is readers. The study found that the political outlook of a paper's readers explained about 20 percent of the variation in slant that the authors uncovered. No other factor showed such a strong correlation.

The reason for this is that owners find it more profitable to reflect the views of their readers than to impose their own perspective, the authors conclude. And, most of the newspapers studied were close to the ideological "sweet spot" that would maximize their profits, the authors calculate. Even a small deviation from this ideal bias would cut circulation by some 3 percent, so newspapers hew closely to the ideological stance that makes them the most money. "Our work shows that consumers play a fundamental role in determining the ideological positioning of media outlets," the authors write.
I don't find this result too surprising. It is hard for me to imagine that a newspaper can long ignore the median voter in a market (I would call this a Stiglerian or Peltzman-ian view of newspapers -- they are in the end as much subject to pressure groups as are elected officials.) One can always indulge a preference at some cost, but as the competition from other media sources increase these papers have to move towards the market median.

This should not cause any comfort for conservatives in Minnesota. The Twin Cities market is represented by two elected officials -- Betty McCollum and Keith Ellison -- that are to the left even of the median Democratic voter in national elections. The StarTribune, reacting to the market, should keep their paper to that left if the Gentzkow and Shapiro results are correct. Interestingly, when I discussed this paper with some liberal non-economist friends of mine, they argued that the STrib has moved a little to the right since being bought by McClatchy. I don't know that this is wrong -- if what Gentzkow and Shapiro have identified is a market test for newspapers, and if the previous owners were quite liberal themselves, then the paper might have moved a little to the right. What I would disagree with my friends about is that it's the result of corporate purchase. Just because the paper was owned by an ideological family rather than a corporation doesn't make the loss of revenue any less important. They might have moved less, but they still would have moved.