Maria PetrovaNew Economic School

ESNIE, 4th June 2010

OutlineTwo big questions:1) Is media important?

Any independent effect on people’s behavior? Different counterfactuals:

Different media… …or no media at all

If media is important, what it is important for?

2) If media is important, what drives media content?

Media effects

Traditional studiesPeople come to be interested in media effects

during and after WWIIBut: early studies did not find any effects

Self-selection to media consumption is the main problem

“Minimal effects” paradigmMedia reinforce existing beliefs and

predispositionsLazarsfeld, Berelson, and Gaudet 1948;

Berelson, B. R., P. F. Lazarsfeld, and W. N. McPhee 1954; Klapper 1960

Does media matter? ExamplesFox News and 2000 Bush-Gore electionsRussian public television and elections of

Unity and Vladimir Putin in 1999-2000German radio in 1930s and Nazi supportRTLM radio in Rwanda in 1994 and Tutsi

genocideTelevision and Mexican pivotal 2000

elections

MethodologyThe main problem is self-selection

People choose media which reflect their preferences and prior beliefs

As a result, effects are either too small, if a study controls for individual pre-existing preferences, or too large, if a study does not do it

Need some exogenous variation to identify the effect

Field experiments (e.g. Gerber, Karlan, and Bergan 2009, free 10-week subscription to Washington Post or Washington Times)

Methodology - 2Another potential solution: use geography…

Ground conductivity, proportion of woodland (e.g. Strömberg 2004)

Irregular Terrain Model (ITM) and mountains (e.g. Olken 2009)

ITM and idiosyncrasy of Soviet times resource allocation (e.g. Enikolopov et al. 2010)

Elevation (our work in progress in Croatia)

Methodology - 3… or other source of idiosyncratic variation

Cable industry variables (DellaVigna and Kaplan 2007)

Different overlap between media markets and Congressional districts (Strömberg and Snyder 2009)

Variation in coverage due to Olympic Games or other exogenous events (Einesee and Strömberg 2007)

Different distance to the nearest newspaper publishing information about school grants in Uganda (Reinikka and Svennson 2004)

QuestionsWhat are the outcomes?

CorruptionVoting behaviorSocial capitalViolenceConsumption, investment…

Is the presence of media important?i.e. compare situations with and without media

Is media content important?i.e. compare situations with and without a

particularly biased media outlet

Comparison of effectsPersuasion rates (DellaVigna Kaplan 2007, DellaVigna

Gentzkow forthcoming)How many people are convinced by a media outlet to

change their behavior?

Here i{T,C}, ei is the share of those receiving the message,

yi is the share of those who adopt behavior of interest,

y0 is share of those who would adopt it without the message

01

1*100

yee

yyf

CT

CT

Voting studiesEffect of Fox News on Bush vote share 11.6% (DellaVigna and Kaplan 2007)Effect of NTV, the national channel independent

from the government, onvote share of opposition parties in Russia: 7.7% vote share of pro-government party in Russia: 66%

(Enikolopov, Petrova, Zhuravskaya 2010)Effect of Washington Post free subscription on

Democratic vote share19.5% (Gerber, Karlan, Bergan 2009)Effect of unexpected Democratic endorsements

on Gore vote share 6.5% (Knight and Chiang 2009)

Turnout studiesEffects of different GOTV technologies (Gerber and Green

2000): 15.6% persuasion rate for door-to-door canvassing1.0% persuasion rate of 1-3 mailing cards

Effect of the introduction of television in 50s and 60s (Gentzkow 2006):4.4% persuasion rate of exposure to television

Effect of newspaper entry in 19th and 20th century U.S. counties (Gentzkow and Shapiro 2009)12.9% persuasion rate of access to some local newspaper

Effect of local news in Spanish on turnout of Spanish population7.6 % effect on individual turnout in midterm elections, 3.5%

effect in presidential elections

Mechanism of persuasionRational choice models, with media consumers

not fully discounting information from biased sources (e.g. Genzkow and Shapiro 2006; Petrova 2008; Gehlbach and Sonin 2009)

Behavioral models, with consumersunderestimating the biases in media content (e.g.,

Cain et al. 2005; Eyster and Rabin 2009), thinking categorically (Mullainathan 2001;

Mullainathan, Schwarzstein, and Shleifer 2008), or double counting repeated information(DeMarzo,

Vayanos, and Zwiebel 2003)More detailed survey in DellaVigna and

Gentzkow (forthcoming)

Outside United States…Convincing evidence of media effects is scarceEffect of West German television on anti-communism

feelings in Eastern Germany (Hainmueller and Kern 2009)

Effect of RTLM radio on killing of Tutsi in Rwanda (Yanagizawa 2010)

Some studies which do not use field or natural experiments

Lawson and McCann (2005): media effects in Mexican 2000 elections

Ladd and Lenz (2009): Effect of unexpected change in endorsement pattern of Sun and Daily Star on vote for Labour in Britain

Reinikka and Svensson (2004): Effect of newspaper coverage of funding arrangements on school enrollment in Uganda

OverallHot topic for empirical research; many gaps in

the literatureMedia effects in countries other than U.S.

Other democratic countriesAuthoritarian states and dictatorshipHistorical studies

Media effects in other circumstancesCivil wars International conflictsRegime changes

Media effects on other types of behaviorConsumption, investment Protest behaviorFirm’s strategy

Example: media effects in Russia in 1999

Motivationbased on Enikolopov, Petrova, Zhurvaskaya (2010)

Two storiesIn August 1999, Putin, with popularity rating

between 1 to 2%, was appointed as prime minister. Eight months later, he was elected president by getting 52.9% of the vote.

In December 1999 Parliamentary elections pro-government party, Unity, which did not even exist two months prior to the election, scored the second with 23.8% of the total vote

Mass media seem to play important roleThe goal of the paper is to establish causal

effect of media on voting behavior

Identification - 1Compute predicted availability of NTV, the only

national channel independent from the government in 1999Use data on location and power of transmittersUse ITM model (Hufford 2002, Olken 2008) which

takes into account geographic obstacles to signal propagation to predict signal strength

Use signal strength and survey data to predict NTV availability

Compare subregions with different availability of NTV with region fixed effects included

Use signal strength as instrument for NTV exposure in individual-level analysis

Identification - 2Look at the determinants of availability of NTV

transmittersSystem of transmitters was inherited from Soviet

educational channelTransmitters were more likely to be located in large

industrial towns, so 3 basic variables explain their location

Availability of transmitters not correlated with pre-existing political preferences after these 3 variables are taken into account

Placebo experimentIn 1995 NTV was not able to use this national

system of transmittersCheck if NTV had any effect on voting in 1995

ResultsEffects of predicted NTV availability

+6.3% on vote for opposition parties, positively covered by NTV

- 8.9% on vote for pro-government party, criticised by NTV

-3.8% on turnoutOn individual level, significant effect of NTV even

controlling for voting intentions 1 month before elections

Persuasion rates7.7% for positive message65.6% for negative message

Media bias

All the news that fits to printWhat drives media slant?Can we talk about media bias?Who are the actors?

Media consumersMedia outletsPotentially, some other group interested in

media content Government

Special interest groups Advertisers Journalists

Media biasDiscretion which media outlets have over

contentChoice of topicsChoice of expertsEditorialsEndorsementsReporting/non-reporting valuable information

(e.g. the state of the world)Assume that some unbiased point is defined…

Bias can be viewed as deviation from this unbiased point

Some measuresExperts cited by different members of

Congress (Groseclose and Milyo 2005, Gasper 2009)

Language used by different members of Congress (Gentzkow and Shapiro 2010)

Support of Supreme Court decisions by editorials (Ho and Quinn 2008)

Recommendations of mutual funds with and without advertising (Reuter and Zitzewitz 2006)

Empirical evidenceGentzkow and Shapiro (2010):

Use a measure of media bias based on phrases used by Democrats and Republicans in Congress, e.g. “war on terror” vs “war in Iraq” or “tax cut” vs “tax relief”

Evidence for demand-side effect, 20% media bias is explained by political preferences of local population

No evidence of economically significant supply-side effects

Reuter and Zitzewitz (2005): Financial recommendations biased to mutual funds

advertised in newspapers No bias for Wall Street Journal

Supply-side explanationsGovernment

Besley and Prat 2006, Gehlbach and Sonin 2009, Qian and Yanagizawa 2009

Journalists Baron 2004, Puglisi 2006

Special interest groups Herman and Chomsky 1988, Dyck et al. 2008, Alston et

al. 2010, Petrova 2008Advertisers

Baldasty 1992, Ellman and Germano 2009Political parties

Kaplan 2003, Petrova 2010

ExamplesCBS and Abu Graib story (2004)

CBS received informationchairman of the Joint Chiefs of Staff personally called

CBS anchor asking to suppress photos and videosSecret-police chief Montesinos and TV channels in

Peru (2000)Bribes to TV owners were substantially higher than

bribes to judges or members of parliamentsSmall cable channel finally exposed bribe videos

which facilitated the change of regimeGeneral Motors and LA Times (2005)

GM cancelled its advertising contract with LA Times after a negative story about its products was published

Demand-side explanationsSome media consumers want media slanted in

particular directionCoverage consistent with their priors

Confirmatory bias (Rabin and Schrag 1999)Models of media markets with consumers’ preferences

for bias (Mullainathan and Shleifer 2005) or reputation Gentzkow and Shapiro 2006)

Models with exogenous changes of control in media markets (Durante Knight 2009)

Lippmann (1922) “a newspaper can flout an advertiser, it can attack a powerful banking or traction interest, but if it alienates the buying public, it loses one indispensable asset of its existence”

Effect of competitionSupply-side driven bias: competition helps

Increases incentive of media outlets to please the audience

Increases payment necessary for influencing media (e.g. Besley and Prat 2009)

Demand-side driven bias: competition does not necessarily reveals truthIncreases incentives of media outlets to stick to

people’s priors (Gentzkow Shapiro 2006)Allows consumers to self-segregate more

effectively (Mullainathan Shleifer 2005)

Effect of advertisingDoes increasing reliance on advertising revenues

reduces supply-side media bias?Theoretically, two answers:

Yes (Besley Prat 2006, Gentkow et al. 2006, Gabszewicz et al. (2001, 2002)

It depends (Gehlbach and Sonin 2009, Petrova 2008)Anecdotal evidence suggest advertising stimulated

development of independent press in the U.S. Baldasty, 2002, Smythe 2002, Starr 2004

Empirically , true for American newspapers of 1880s Petrova 2010

OverallWhat determines media bias?

Interesting question, theoretically and empirically

Potential directions for future research:How supply-side and demand-side interact in a

two-sided market framework?Media competition and interest group

competition with heterogenous consumersMore empirical evidence for supply-side effects More empirical evidence for countries other

than United States

Example: how advertising revenues created an independent press

Argumentbased on Petrova (2010)

Higher advertising revenues create incentive for media to become independent

Theoretical conditions for advertising effect:Besley and Prat (2006): independent media is always

preferred by the audienceGehlbach and Sonin (2008): truth is preferred and

government does not want to interveneChen and Riordan (2007): market expansion

increases varietyGabszewicz et al. (2001): pooling equilibrium

becomes possibleGentzkow et al. (2006): size of bias does not matter

Necessary to look for empirical evidence

Empirical evidence Data from unique dataset on independent and

partisan newspapers in U.S. ,1881-1886Newspapers had political affiliation: Democratic,

Independent, or RepublicanPolitical affiliation implied control by political parties

through printing contractsthrough access to political informationthrough convincing constituency to subscribe

Downside of party control: inability to choose editorial policy

Data on advertising rates and location of these newspapers

MethodologyMain hypothesis: higher profitability of

advertising makes newspapers more likely to be independent

Fixed effects estimationcounty or newspaper fixed effects

Analysis of entryIV results:

local laws and ordinancesoutdoor advertising: strict regulation in some

places, after Niagara Falls storyhandbill and newspaper distribution

ResultsPositive and significant effect of local

profitability of advertising on newspapers’ independence2-3% higher probability of being independent

after 1 standard deviation changeChanges to independent affiliation more likelyEntries of independent newspapers more likely

Implies within-county growth of advertising rates explains 32% of the growth of independent newspapers from 1881 to 1886

Thank you!