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The economy. How do the media cover it and what are the effects? A literature review

The economy. How do the media cover it and what
are the effects? A literature review
Alyt Damstra |Mark Boukes |Rens Vliegenthart
University of Amsterdam
Alyt Damstra, Amsterdam School of
Communication Research, University of
Amsterdam, Nieuwe Achtergracht 166, 1018
WV Amsterdam, the Netherlands.
This article provides an overview of key findings in the field
of economic news research. The focus is on the relationship
between the real economy and economic news, and the
subsequent effects of economic news on people's economic
perceptions. Additionally, we discuss research that looks
into the construction of economic and financial news. Rec-
ommendations for future research relate to the application
of mixed methods approaches and individual level studies,
and a specific focus on new (social) media.
It is a phenomenon as ubiquitous as it is elusive: the economy. When asked, most people have an ideaby and large
of how the national economy is doing. Some have personally experienced certain economic advancements or
setbacks or know, for example, people who recently found or lost a job. However, more than by such firstor
secondhand experiences, people learn about the state of the economy by reading and watching the news. Economic
news stories shape people's economic perceptions, which, in turn, have profound impacts on a range of other
attitudes and behaviors, and sometimes even again on the economy itself.
The interrelationships between economic news, economic perceptions, economic conditions, and other (political)
attitudes and behaviors have been the focus of research for decades. Besides the work on the effects of economic
news, there is a vast body of research that focuses on the content of economic news, showing how economic news
is characterized by a set of specific features. A strand of mostly qualitative research has focused on the process of
economic news production, in which different actors with different views on the economy and its management com-
pete for limited media space in an ongoing power struggle.
From a societal perspective, it is imperative to study economic newsboth its content and its effectsbecause
it has such a strong bearing on the daily lives of citizens. Whether news reports deal with unemployment rates,
with inflation, or with bailout programs for bankrupt Eurozone member states, people are sensitive to the
message and tone of the content, especially when the news is negative. Moreover, the impact of economic news
on people's economic perceptions has subsequent consequences for a range of political behaviors, such as party
preference (e.g., Kalogeropoulos, Albæk, De Vreese, & Van Dalen, 2016; LewisBeck & Stegmaier, 2000; Nadeau,
Niemi, Fan, & Amato, 1999; Sanders, 2000).
Received: 5 October 2017 Revised: 25 January 2018 Accepted: 22 February 2018
DOI: 10.1111/soc4.12579
Sociology Compass. 2018;12:e12579.
© 2018 John Wiley & Sons 1of14
From an academic perspective, economic news comes with unique features rendering it an interesting topic to
study media effects. The availability of standardized economic data is high, facilitating comparisons between reallife
trends and economic news in different contexts, often a more complicated endeavor in other areas such as crime,
foreign affairs, or the environment. As Soroka (2014, p. 83) puts it: It allows us to explore the difference between
the distribution of information in reality and the distribution of information in news content.This is not to say that
economic news is neutral or unidimensional, for a variety of reasons it is not. But news reports about decreasing or
increasing unemployment rates, or a growing or shrinking economy, do lend themselves to be compared with
overtime trends in the actual measurements, allowing to assess realworld reflectiveness of certain news content.
This article provides an overview of the key findings in the field, shedding light on what we know about economic
news, and what is still to be learned.
2.1 |Real economy and economic news coverage
In the mid1970s, one of the first studies comparing the real economy to the content of economic news stated: The
model of the economic story, especially as told on television, is the soap opera(Stein, 1975, p. 40). Despite the
inherent complexity of the economy as a phenomenon, the media show a persistent tendency to simplify and to
excessively dramatize. The consequences of this reporting are, as economist Herbert Stein argues, hard to evaluate,
because we do not know to what extent public opinion is formed by the media(Stein, 1975, p. 41). More than
40 years later, Stein's first observation has not lost the slightest relevance: The economy is still complex, arguably
much more complex today than it was in the 1970s, and economic news is still characterized by several persistent
biases. But in contrast to Stein's second observation, we now have some ideas about the consequences of economic
news due to decades of research, on which we reflect below.
The tendency among journalists to dramatize the state of the economy is confirmed by many empirical studies.
The 1992 US Presidential elections have been a catalyst for research into the content of economic news, since these
have made clear how economic news rather than real economic circumstances have the capacity to shape electoral
outcomes. In the US, Goidel and Langley (1995) are among the first to systematically investigate the responsiveness
of economic news to real economic conditions, concluding that the media have plenty of latitude in deciding what
economic news is important, and this latitude is exercised by focusing disproportionately on bad economic news
(Goidel & Langley, 1995, p. 320). This observed negativity biasthe tendency to systematically devote more attention
to negative as compared to positive economic trendsis not a standalone finding but reflects a rather generalizable
pattern in economic news reporting.
Scholars find negativity biases in macroeconomic news reporting (Damstra & Boukes, 2018; Fogarty, 2005;
Hagen, 2005; Hester & Gibson, 2003; Ju, 2008; Soroka, 2006, 2014; Soroka, Stecula, & Wlezien, 2015; Van Dalen,
De Vreese, & Albæk, 2015; Wattenberg, 1985) and news about unemployment rates (Soroka, 2012). Although
most research focuses on print media, television broadcasts are also found to foster a preference for bad news
when reporting about macroeconomic developments (Hester & Gibson, 2003) or about economic subthemes such
as inflation and unemployment rates (Harrington, 1989). An area still understudied is how economic news is
reported on social media. In a recent exploratory study, Soroka, Daku, HiaeshutterRice, Guggenheim, and Pasek
(2017) find that the tone of Twitter posts is more responsive to positive economic shifts, in contrast to traditional
An exceptional finding is provided by Casey and Owen (2013), who investigate the antecedents of economic
news in the US (19832008) and who do not find a structural (negativity) bias. Similarly, in the context of the
financial crisis, Schifferes and Coulter (2013) conclude that the BBC news website provided a rather balanced output
in terms of positive and negative coverage. Notwithstanding these exceptions, research repeatedly suggests a rather
robust tendency in economic journalism to overemphasize negative trends, which might lead to a distorted informa-
tion environment for citizens, at least in modern Western democracies.
In terms of newsworthiness, not all types of economic developments are considered equally important. Several
studies point to a remarkable sensitivity among journalists towards shifts in unemployment rates (Fogarty, 2005;
Goidel & Langley, 1995). Fogarty (2005) finds that changes in unemployment rates lead to more economic news,
while changes in inflation rates or ICI (index of coincident indicators) do not lead to more coverage. Arguably, this
may be explained by the abstractness of the latter issues. Additionally, Soroka et al. (2015) investigate whether news
content is most reflective of past, current, or future economic trends. While often perceived as a function of current
economic conditions, the authors find that economic news is actually more reflective of future conditions: It
responds more to where the economy is going, not where it has been or where it currently is(Soroka et al., 2015,
p. 467).
2.2 |Specifying the measurements
The idea of mass media producing content that is systematically more negative than economic reality gives reason to
is based on two types of findings: (1) a bad economy leads to more economic news, and (2) a bad economy leads to
more negative economic news while a good or improving economy does not lead to more positive coverage. While
some studies take either volume or tone as their main dependent variable (e.g., Goidel & Langley, 1995), most recent
research looks at both (e.g., Fogarty, 2005; Lamla & Lein, 2014; Soroka, 2012, 2014; Soroka et al., 2015; Van Dalen
et al., 2015). Volume is most often operationalized straightforwardly as the number or share of economic news items
per time unit (print or television), while tone captures the general sentiment of an economic news item (i.e., valence:
positive or negative). In some cases, volume and tone are captured simultaneously in a single measurement, such as
the number of recession headlines in the New York T imes (e.g., Wu, Stevenson, Chen, & Güner, 2002).
On the side of the real economy, as explanatory variable in such analyses, it is increasingly common to distinguish
between levels (e.g., absolute unemployment rate) and changes (e.g., the developmentup or downwardsof the
unemployment rate). Stimson (1991) is among the first to stress that journalists are particularly responsive to change:
Journalists pursue newsas a criterion of relevance. Change is news. Stability isn't.(Stimson, 1991: xxiii). Following
this line of thought, Nadeau et al. (1999) argue that journalists respond to shifts in objective economic indicators,
rather than to levels, which is empirically confirmed by their data. Just like novelty, change is a defining feature of
newsworthiness; for that reason, changes in the realworld economy are more likely to be selected as news (Galtung
& Ruge, 1965; Soroka et al., 2015).
Following news values theory, it can be anticipated that negative change (i.e., economic downturn) is particularly
newsworthy to journalists, since it combines two classic news values: novelty and negativity. This is empirically
confirmed by recent research finding positive effects of economic decline on the volume of economic news (Damstra
& Boukes, 2018; Van Dalen, De Vreese, & Albæk, 2016) while positive economic developments in terms of
recovery or growth do not trigger journalists to write more about the economy. A similar asymmetry is found for
the tone of news; negative economic trends lead to more negative coverage, while the opposite effect of an
improving economy fails to happen (Damstra & Boukes, 2018; Fogarty, 2005; Goidel & Langley, 1995; Soroka,
2006; Van Dalen et al., 2015).
2.3 |Explaining the negativity bias
In explaining the prevalence of negative news stories, many scholars point to the role of the media as fourth estate.
Traditionally, journalists are argued to fulfill a watchdog function in modern democracies; they scrutinize and control
governmental powers, rendering it responsive and responsible (Kantola, 2007; WhittenWoodring, 2009), a function
that can also be deployed to control business actors (Kalogeropoulos, Svensson, Van Dalen, De Vreese, & Albæk,
2014). From this perspective, it is only logical that negative trends receive more attention than positive
developments: To wake up the citizenry, jounalists should ring the burglar alarmwhen the economy moves in the
wrong direction, so people can defend their interests in future elections (Zaller, 2003).
Research, however, shows that economic and financial journalists hold divergent views when it comes to this role
(Strauß, 2018; Tambini, 2010; Usher, 2012). Tambini (2010) finds that only a small minority of UK financial journalists
actually perceives themselves as watchdogs. Usher (2012) identifies two lines of reasoning (or defenseas she puts
it) as brought forward by New York Times journalists who she interviewed. First, journalists primarily identify with a
transmissionrole: It is their task to provide accurate information, but it is up to the public to respond adequately
(Usher, 2012, p. 203). Second, journalists are hampered to perform as watchdogs because they do not have enough
access to necessary information. These arguments are in line with a recent study by Strauß (2018) who points to a
discrepancy between the watchdog role that journalists envision for themselves and their actual role enactment.
These findings touch upon a core challenge posed to economic journalists. The complex economicfinancial reality
combined with increasing institutional pressures makes investigative journalism a costly and risky endeavor, while
it is precisely through investigations and critical indepth news reporting that the watchdog role can be fulfilled
News values theory provides another explanation for the prevalence of negative news. References to something
negative make a story more likely to be selected by journalists (e.g., Galtung & Ruge, 1965; Harcup and O'Neill, 2001)
because bad news tends to be consensual and unambiguous as well as unexpected, presupposing a culture in
which progress is somehow regarded as the normal and trivial thing that can pass unreported(Galtung & Ruge,
1965, pp. 6970). Together, these features make negative phenomena more likely to be selected as news.
In addition, work on behavioral economics has shown how people are more responsive to negative compared to
positive information (e.g., Holbrook, Krosnick, Visser, Gardner, & Cacioppo, 2001; Soroka, 2006): They are loss
aversive. The psychological process behind this asymmetry is described as the negativity effect: The greater weight
assigned to negative as compared to equally positive information in the formation of judgments (Ahluwalia, 2002;
Tversky & Kahneman, 1973, 1974). As journalists are individuals too, their own (asymmetric) interests combined with
the (asymmetric) interests of their newsconsuming audience might lead them to perceive negative information as
more important (Soroka, 2006, p. 374).
2.4 |External factors
A number of external factors is identified that influence the relationship between the real economy and economic
news. First, on the level of the media organization, scholars point to endorsement policies by outlets as a possible
moderator of news selection processes. In the US, where many media outlets have a clear political leaning, democratic
media are found to stress negative economic conditions (e.g., high unemployment rates) more strongly when the
incumbent is a Republican (Larcinese, Puglisi, & Snyder, 2011). In the European context, evidence suggests a similar
effect of ideological orientation on the interpretation of economic news by journalists (Salgado & Nienstedt, 2016).
Also, the type of outlet could play a role: Popular (e.g., tabloids) and regional media outlets seem to emphasize
negative economic news more than quality and specialized media (Boukes & Vliegenthart, 2017).
Second, economic conditions might be of influence. Wu et al. (2002), for example, find that news is least reflec-
tive of the real economy during recessionary periods (19871990), when the prevalence of negative information
exceeds the (already gloomy) economic conditions. In fact, the mass media reflected more of the public's perception
about the economic situation and less of the economic realityitself (Wu et al., 2002, p. 30).
Finally, building on the idea of a limited carrying capacity by the media (Hilgartner & Bosk, 1988), Fogarty (2005)
looks at whether the presence of rival stories changes the relationship between the economy and coverage. He finds
that news reports dealing with the first Gulf War or with US fighting in Somalia indeed tend to suppress the amount
of economic news coverage, making the correlation between the real economy and economic news weaker (see also
Reese, Daly, & Hardy, 1987). In contrast, election campaigns serve as an amplifier of economic news, strengthening
the bond with the real economy (Fogarty, 2005).
2.5 |Structural constraints
Quantitative research offers important insights into the structural biases distinguishing economic news from
economic reality. Qualitative research, additionally, lays bare the mechanisms of economic and financial news produc-
tion, critically assessing the factors at play that determine which issues receive attention in the first place, and how
these issues are covered in terms of framing.
Media content is not neutral. In fact, it is a social construct and, therefore, often ideologically colored. The vast
majority of the economic/financial press tends to support the neoliberal status quo, thereby failing to offer a wider
range of other perspectives to the public, most notably perspectives that critically challenge existing capitalistic struc-
tures (e.g., Berry, 2012, Berry, 2015, Berry, 2016; Chakravartty & Schiller, 2011; Damstra & Vliegenthart, 2016; Davis,
2006, Davis, 2011; Doyle, 2006; Durham, 2007; Duval, 2005; Jensen, 1987; Marron, SarabiaPanol, Sison, Rao, &
Niekamp, 2010; Philo, 1995; Philo, Miller, & Happer, 2015; Tambini, 2010; Tracy, 2012). In general, a certain bias
in the selection of news stories is inextricably linked to news production processes: (National) cultures, organizational
structures, ideological outlet profiles, and differential power of political and societal actors, as well as the choices by
individual journalistsall have an impact on the construction of news content (Vliegenthart & Van Zoonen, 2011). As
a result, news tends to be characterized by negativity, conflict framing, and an overrepresentation of the views of
those having political power (Bennett, 1990). However, the specific nature of economic news leads to an additional,
more issuerelated bias: Journalists are guided by certain considerations regarding the utility and levels of financial
literacyamong their target audience (Doyle, 2006, p. 436). In other words, the high complexity of the economic
and financial world requires that journalists tailor their stories to their readership in terms of comprehensibility.
As a result, two types of financial journalism have emerged over the years: (a) specialist financial journalism
serving a selective audience of financial professionals and (b) generalist financial journalism that focuses on informing
the broader public (Schifferes, 2011). For mainstream, nonfinancial media, this implies that economic news needs to
be easy to grasp and entertaining (Clark, Thrift, & Tickell, 2004; Guerrera, 2009), which results in an overrepresenta-
tion of superficial news about wellknown companies and big money deals (Doyle, 2006; Tambini, 2010; Tumber,
1993), at the expense of more critical, indepth analyses key to investigative journalism. Additionally, with financial
markets becoming increasingly complex, journalists themselves are often lacking the specialized knowledge to criti-
cally assess financial products and practices (Davis, 2006; Doyle, 2006; Guerrera, 2009; Marron et al., 2010;
Schifferes, 2011; Schiffrin, 2015; Tambini, 2010; Tett, 2009; Usher, 2012).
Due to this increasing complexity, economic/financial journalists are often in a position of high source dependency.
AsTambini (2010, p. 159) puts it, interested parties [] sometimes constitute the only repositories of relevant data and
(they) employ the main experts.Therefore, journaliststhemselves lacking both expertise and accessneed to rely on
these elite sources, which generally do not bring forward radical critical perspectives. As a result, stakeholdersthrough
their PR servicesare able to control information. This elite source dependency is empirically confirmed by many stud-
ies (Berry, 2015, 2016; Davis, 2000; Fahy, O'Brien, & Poti, 2010; Galbraith, 2004, 2009; Kollmeyer, 2004; Manning,
2013; Rafter, 2014; Reich, 2012; Strauß, 2018; Tambini, 2010; Thompson, 2013; Tracy, 2012) and comes at the
expense of the use of, for example, union leaders or workers as primary sources (Kollmeyer, 2004). Also compared with
other types of news reportingpolitical, territorialeconomic journalists use least diverse sources (Reich, 2012).
Furthermore, the close ties connecting (financial) journalists to (financial) experts carries the risk of the former
being capturedby the system of the latter. This can be illustrated by, for example, financial outlets receiving huge
advertising revenues from credit card companies (Davies, 2009; Davis, 2002, 2011; Kollmeyer, 2004; Marron et al.,
2010; Schechter, 2009; Tambini, 2010) or financial reporters crossing the aisleand start working for financial
corporations (Schechter, 2009). This close interconnectedness is argued to (partly) account for the fact that the news
media were caught by surprise when the 2008 financial crisis broke out and left many wondering why (almost)
nobody had seen it coming, including highly esteemed financial media (Berry, 2012; Fraser, 2009; Guerrera, 2009;
Fahy et al., 2010; Lashmar, 2008; Marron et al., 2010; Mercille, 2013; Schechter, 2009; Schifferes, 2011, 2012;
Tambini, 2010; Tracy, 2012).
Furthermore, institutional pressures reinforce the tendency by the media to report in a way that is compatible
with dominant perspectives as put forward by (economic and political) elites. Media outlets themselves are commer-
cially driven enterprises as well (e.g., Davis, 2000; Doyle, 2006; Guerrera, 2009; Hamilton, 2009; Happer, 2017;
Knowles, Phillips, & Lidberg, 2017; Philo et al., 2015; Schechter, 2009). The professional environment in which jour-
nalists operate has become increasingly competitive, due to institutional pressures related to declining readerships,
insecure advertisement revenues, increased output demands, and the rise of free online data services. This has
resulted in a branch with high degrees of compartmentalization (Schifferes, 2011; Tett, 2009), in which expensive
and risky ventures such as investigations are increasingly difficult to fund(Tambini, 2010, p. 169).
The financial crisis (20082009) has served as a fruitful test case for the analysis of existing biases in financial and
economic news reporting. Often departing from the question why the media did not see it coming (e.g., Fraser, 2009;
Lashmar, 2008; Starkman, 2009), scholars scrutinized the way in which the crisis was covered (Arrese & VaraMiguel,
2016; Berry, 2012; Damstra & Vliegenthart, 2016; Happer, 2017; Pirie, 2012; Schifferes & Knowles, 2014) in multiple
contexts. It is concluded that media covered the crisis rather uncritically, depriving the audience from a diverse array
of possible solutions to it (Arrese & VaraMiguel, 2016; Berry, 2012; Happer, 2017; Mercille, 2013; Pirie, 2012). The
fact that even the most encompassing crisis of our times did not evoke more radical and critical responses under-
scores the dominance of the neoliberal paradigm in economic news reporting (Happer, 2017) and the difficulty for
journalists to forge new ways to analyze outside the prevalent marketdriven consensus (Arrese & VaraMiguel,
2016, p. 150).
3.1 |Media effects on consumer confidence
Exposure to economic news positively affects people's knowledge of this topic, especially for those citizens with few
negativereallife economic experiences and those who have no alternative sources of information such as inter-
personal communication (Kalogeropoulos, Albæk, De Vreese, & Van Dalen, 2015). An extensive base of empirical
research shows how economic news is key to citizens' perceptions of the economy (e.g., Behr & Iyengar, 1985; Blood
& Phillips, 1997; Damstra & Boukes, 2018; De Boef & Kellstedt, 2004; Doms & Morin, 2004; Goidel, Procopio, Terrell,
& Wu, 2010; Hetherington, 1996; Soroka, 2014; Soroka et al., 2015; Van Dalen et al., 2016; Wu et al., 2002), while a
small subset of studies report no or minimal effects (e.g., Haller & Norpoth, 1997; Hopkins, Kim, & Kim, 2017; Lischka,
2016; Wu, McCracken, & Saito, 2004).
The relevance of economic news has repeatedly been demonstrated by its impact on consumer confidence. As a
measure that combines people's evaluations of their own financial situation with their assessments of the national
economy, consumer confidence captures economic sentiment in a rather complete way. A landmark study in this
domain is provided by Blood and Phillips (1995), who are among the first to systematically investigate this relationship
while controlling for the impact of the real economy. They found that the number of recession headlines in the New
York Times has a significant and negative effect on consumer confidence. In a followup study (Blood & Phillips, 1997),
the same effect is found for general (negative) economic news in the same newspaper. Results are confirmed by
Doms and Morin (2004) who take 30 newspapers into account and apply their model to data covering 25 years
(19782003). Other studies find similar economic news effects, within and outside the US context (e.g., Alsem,
Brakman, Hoogduin, & Kuper, 2008; Goidel & Langley, 1995; Hollanders & Vliegenthart, 2011; Wu et al., 2002).
Research in which good and bad economic news is distinguished demonstrates that the public responds asym-
metrically to these messages. The negative effect of negative economic news is not accompanied by an equally strong
positive effect of positive economic news. Similar to the sensitivity among journalists to bad economic conditions, the
public is most responsive to negative economic information (e.g., Damstra & Boukes, 2018; Hester & Gibson, 2003;
Soroka, 2006). Negative news leads to more pessimism, while positive news does not cause the same degree of
optimism among the public. However, negative news also leads to higher levels of internal economic efficacy, as
Svensson, Albæk, Van Dalen, and De Vreese (2017b) show. Negativity may trigger people's motivation to understand
and to use information to deal with possible threats.
In most measures, consumer confidence contains items asking people to judge the past and future state of their
national economy. More specifically, it asks whether they think the economy has or will deteriorate(d) or improve(d).
Specifying confidence on this time dimension yields additional, but also mixed insights into economic news effects.
Damstra and Boukes (2018) find that economic news matters for people's future judgments but not for their
evaluations over the economic past. By contrast, Soroka (2014) and Soroka et al. (2015) find media effects on people's
prospective but also retrospective judgments.
3.2 |Media effects on the economy
The media malady hypothesisposits that economic news might also have an impact on the economy itself. This idea,
famously coined in 1990 by The Washington Post (Is the economy suffering from media malady?), entails that by
paying attention to the possibility of a recession, the media might actually help to create one. There is some empirical
evidence supporting this hypothesis. Blood and Phillips (1997) report longterm effects that they describe as
uniformly and persistently(but that were absent in their 1995 study). Wu et al. (2002) conclude that the amount
of recessionrelated coverage in the New York Times influences real economic changes, at least in times when
economic conditions are bad. Huxford (2012) finds that UK and US journalists, by writing about the possibility of a
recessioneven in times of economic growthmake the occurrence of an actual recession more likely. More recently,
research on (policy) uncertainty in economic news indicates consequences for stock market volatility and trends in
policysensitive areas (Baker, Bloom, & Davis, 2016).
Financial journalism, similarly, might affect stock market movements, which provides another illustration of the
close interrelationship between financial journalists and financial professionals described above. Davis (2006) shows
how elite actors in the financial markets rely on economic news to make their decisions. This is in line with aggregate
level studies that examine the reflexive nature of stock markets, finding structural effects of (social) media coverage
(e.g., Boudoukh, Feldman, Kogan, & Richardson, 2013; Casarin & Squazzoni, 2013; GroßKlußmann & Hautsch, 2011;
Kleinnijenhuis, Schultz, Oegema, & van Atteveld, 2013; Strauß, Vliegenthart, & Verhoeven, 2017).
3.3 |Explaining economic news effects
The agendasetting literature provides the most dominant explanation for economic news effects; by emphasizing
certain issues over others, the media are able to influence public opinion (McCombs & Shaw, 1972). The impact of
mediated messages gets stronger when the obtrusiveness of an issue is lower (Iyengar, Peters, & Kinder, 1982; Tan
& Weaver, 2007). First coined by Zucker (1978), obtrusiveness can be defined as the amount of personal experience
someone has with an issue (Winter, 1981). When people have none or minimal firsthand experience, the agenda
setting effect is strongest. Applied to the issue of the economy, Blood and Phillips (1997, p. 101) write:
Economic issues that audiences experience directly and dramatically, such as unemployment or recession
may leave less room for media effects (). The general state of the nation's economic health may be a
less obtrusive issue, leaving editors with the opportunity () to raise concern when the public does not
anticipate or feel directly the effects of economic downturn.
Haller and Norpoth (1997, p. 573) use a similar approach when explaining the absence of media effects. They
consider the economy a classic doorstep issue, capable of shaping public opinion through realworld experience,
leaving less room for media effects.
In contrast to the idea of stronger news effects in situations of low issue obtrusiveness, some studies indicate
that economic news effects are strongest in times of crisis, because detrimental economic conditions increase
people's willingness to update their economic expectations (e.g., Carroll, 2003; Doms & Morin, 2004). Under normal
prosperous circumstances, economic expectations tend to be sticky: People have no incentive to regularly absorb
economic information and their expectations, therefore, tend to remain rather stable over time. However, in times
of crisis, people tend to update their information more frequently because (a) it is more likely to (accidently) come
across economic news due to higher volumes; and (b) consumers are more willing to read or watch economic news
items. In particular, dramatically negative headlines (Recession possible!) might be deemed relevant by the public,
because these suggest that the provided information is directly related to their own financial future (Doms & Morin,
2004; McCarthy & Dolfsma, 2014).
The hypothesis of stronger media effects in bad economic times is supported by several studies. Doms and Morin
(2004) find that consumer sentiment is most susceptible to media effects when coverage is high, which is in times of
economic distress. Similarly, Wu et al. (2002) conclude that media effects are strongest in times of downturn, suggest-
ing that people pay greater attention to economic news when the issue is most relevant to them. Goidel and Langley
(1995, p. 326) find most pronounced media effects when economic signals are mixed, and, subsequently, subject to a
variety of interpretations (which was the case during the US 1992 Elections). In contrast, Damstra and Boukes (2018)
do not find any differences in media effects for periods of economic growth versus decline.
Media dependency theory (MDT) provides another theoretical angle to understand the conditionality of media
effects. Originally proposed by BallRokeach and DeFleur (1976), MDT predicts that the impact of news is contingent
upon the level of audience dependency on media information resources: The higher this dependency, the greater the
likelihood that media information will influence citizens' cognitions, feelings, or behaviors. People might be more
dependent upon mediatized information when they have less reallife clues or experiences to build their judgments
on. Therefore, media effects are stronger for people's sociotropic evaluations (judgments of the national economy)
compared to evaluations of their own economic situation (Boomgaarden, Van Spanje, Vliegenthart, & De Vreese,
2011). Kalogeropoulos (2017) shows that personal economic expectations are not influenced by economic news in
general, but only by more dramatic (i.e., tabloid) stories dealing with unemployment specifically. Similarly, economic
news is expected to have a bigger impact on people's expectations for the future than for their evaluations over
the past (Damstra & Boukes, 2018).
Also, higher levels of uncertainty make people more dependent on mediated information. Uncertainty can be
conceptualized as a subjective experience shaped by external circumstances, such as a crisis; however, uncertainty
can also be part of mediated information itself. A recent study by Van Dalen et al. (2016) looks into the impact of
uncertainty when this is explicitly mentioned in economic news articles, and finds a negative effect on consumer con-
fidence, above and beyond the impact of tone. Svensson, Albæk, Van Dalen, and De Vreese (2017a) investigate the
impact of ambiguous economic news and identify economic uncertainty as the mediator through which consumer
confidence is affected.
3.4 |Reversed causality?
Adding to the complexity of the relational framework, some studies suggest the possibility of reversed causality:
Public economic sentiments could potentially affect subsequent media coverage (e.g., Soroka et al., 2015; Stevenson,
Gonzenbach, & David, 1991; Wu et al., 2002). As Soroka et al. (2015) suggest, news reporting is partly a consumer
driven process, which might come with the incentive to reflect public concerns. The idea that public economic
pessimism causes more negative coverage is empirically confirmed by Soroka et al. (2015) as well as Wu et al.
(2002), although the latter finds the effect only to hold during recessionary times.
3.5 |Where to go from here?
Studying economic news, its antecedents and its effects, is key to our understanding of journalistic routines and the
formation of economic perceptions. To further develop our knowledge, several avenues for further research seem
promising. First of all, quantitative research studying the triangle of the economy, economic news, and economic
perceptions needs to be integrated with research critically examining the construction of economic news. Some
contradictory findings coexist that call for further examination: Whereas the former tradition points to a preoccupa-
tion with negativity among economic journalists, the latter identifies the absence of critical perspectives. One expla-
nation for this apparent contradiction might be related to the tendency among journalists to focus on the short term
(Fraser, 2009, p. 80). The negativity bias among journalists, in that sense, might only imply writing more about unem-
ployment when it goes up compared to when it goes down. However, being critical in the short term, without
reflecting upon and questioning the overarching system, eventually leads to economic news reporting in which
negative trends receive only more superficialand therefore uncriticalcoverage.
Second, more individuallevel research is needed. Especially when it comes to the conditionality of economic
news effects, experimental research would help to understand which aspects of (negative) economic news provoke
the strongest effects, which citizens are most susceptible to these effects, and through which mediating mechanisms
these effects occur.
Finally, the overwhelming majority of studies rely on traditional conceptualizations of news media, with print
media being the absolute favorite. There is only limited research into differences across traditional media outlets
(Goidel et al., 2010). While these outlets are still highly relevant, recent research suggests that the content of online
economic news or on (social) media might be systematically different (see, for example, Schifferes & Coulter, 2013;
Soroka et al., 2017) and might have different effects as well. Further exploring this avenue is crucial to enhance
our understanding of the social world around us that is shaped by real economic conditions, by economic coverage
in an everchanging media environment and by people's economic perceptions.
The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this
article: Research conducted for this article was funded by a VIDI grant (project number: 016.145.369) from the Neth-
erlands Organization for Scientific Research awarded to Prof. Rens Vliegenthart.
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Alyt Damstra is currently a PhD student at the Amsterdam School of Communication Research, University of
Amsterdam. Her research focuses on the causes and consequences of economic news coverage.
Mark Boukes (PhD, 2015) is postdoctoral researcher at the Amsterdam School of Communication Research, Uni-
versity of Amsterdam. His research focuses on media effects, in particular of soft news, infotainment, and eco-
nomic news.
Rens Vliegenthart (PhD, 2007) is a full professor Media and Society at the Amsterdam School of Communication
Research. His research interests are economic news effects, mediapolitics relations, and media coverage of social
movements, election campaigns, European integration, and the economic crisis.
How to cite this article: Damstra A, Boukes M, Vliegenthart R. The economy. How do the media cover it and
what are the effects? A literature review. Sociology Compass. 2018;12:e12579.
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... Naturally, as news volumes about economic index changes are high, people are more likely to be exposed to such news (Soroka et al., 2015;Wlezien et al., 2017). Additionally, the public is more interested in predicting future economic conditions than in evaluating past conditions (Damstra et al., 2018;Goidel & Langley, 1995;Mackuen et al., 1992;Soroka et al., 2015). However, the links among economic news, consumers, and the real market are not relatively linear. ...
... The time series relations between consumer sentiment, housing price, headlines, and presidential approval rates were estimated using Granger causality and a VECM model. In communication research, few researchers have used VECM to test time series relations between news coverage and consumer economic sentiments (e.g., Damstra et al., 2018;Lee & Shim, 2017;Soroka et al., 2015). ...
... There are retrospective and prospective judgments on the economy. People are usually more interested in future judgments (Damstra et al., 2018). However, currently, The Korea Research Institute for Human Settlements only provides access to retrospective evaluations of the housing market. ...
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This study relies on 22 expert interviews and a survey among 40 financial journalists in the United States to reassess the role of financial journalists for financial markets in today’s high-frequency information and news era. Findings point to a discrepancy between the ideal active watchdog role journalists picture for themselves and their actual role enactment. Furthermore, the process of constructing and distributing financial news has been found to be self-referential within the financial system, leaving little room for alternative voices. In this sense, the influence of regular financial reporting in driving stock market prices has been found to be limited but contingent on various factors such as unexpected news, repeatedly negative reporting, or news about a merger. Eventually, facing the proliferation of online news, journalists have raised a general concern regarding the loss of journalistic values, but they also see potentials for their discipline in light of automated reporting and online news.
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Citizens’ economic perceptions can shape their political and economic behavior, making the origins of those perceptions an important question. Research commonly posits that media coverage is a central source. Here, we test that prospect while considering the alternative hypothesis that media coverage instead echoes public perceptions. This paper applies a straightforward automated measure of the tone of economic coverage to 490,039 articles from 24 national and local media outlets over more than three decades. By matching the 245,947 survey respondents in the Survey of Consumer Attitudes and Behavior to measures of contemporaneous media coverage, we can assess the sequencing of changes in media coverage and public perceptions. Together, these data illustrate that newspaper coverage does not systematically precede public perceptions of the economy, a finding which analyses of television transcripts reinforce. Neither national nor local newspapers appear to strongly influence economic perceptions.
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Journalists use news factors to construct newsworthy stories. This study investigates whether different types of news outlets emphasize different news factors. Using a large-scale manual content analysis (n = 6489), we examine the presence of seven news factors in economic news across four different outlets types (i.e. popular, quality, regional, and financial newspapers). Results suggest that popular and regional newspapers particularly rely on the news factors of personification, negativity, and geographical proximity. Quality newspapers, instead, employ a rather general pattern of news factors, whereas the financial newspaper consistently relies on less news factors in its reporting. Findings urge scholars to move toward a more detailed understanding of how newsworthiness is constructed in different types of news outlets. --- Keywords: Financial newspaper, news factors, newspaper, news value theory, newsworthiness, popular versus quality, quantitative content analysis, regional newspaper, tabloid versus broadsheet
Personal economic evaluations are a component of consumer confidence and also predict political behavior. However, very few studies have examined the link between mediated information and personal economic evaluations. This research examines the conditions under which exposure to media content influences personal economic expectations as well as which sources of information impact personal economic expectations. Results are based on an integration of a four-wave national panel survey and media content data. Findings show that exposure to unemployment news in tabloid outlets was a significant predictor of personal economic expectations. The implications of these results are further discussed.
Past work suggests that the priorities for information propagation in social media may be markedly different from the priorities for news selection in traditional media outlets. We explore this possibility here, focusing on the tone of both newspaper and Twitter content following changes in the U.S. unemployment rate, from 2008 to 2014. Results strongly support the expectation that while the tone of newspaper content exhibits stronger reactions to negative information, the tone of Twitter content reacts more strongly to positive economic shifts.
This study investigates the interdependent relationships between the stock market and economic news in the U.S. context. 2,440 economic tweets from Reuters and Bloomberg published in September 2015 were analyzed within short-term intervals (5 minutes, 20 minutes, and 1 hour) as well as 50 influential Bloomberg market coverage stories distributed via their terminals for the same period of time. Using Vector Auto Regression analyses, it was found that news volume, news relevance, and expert opinion in tweets seem to influence the fluctuation of the Dow Jones Industrial Average (DJI) positively, while economic news appears to respond to market fluctuation with less coverage, including fewer retweets, favorites, updates, or expert opinions conveyed. Inspecting the influential market stories by Bloomberg, the results imply that while Bloomberg terminals provide firsthand information on the market to professionals, tweets rather seem to offer follow-up reporting to the public. Furthermore, given that the effect of economic tweets on the DJI fluctuations was found to be strongest within longer time intervals (i.e., 1 hour), the findings imply that public traders need more time to evaluate information and to make a trading decision than professional investors.
Journalistic practice emphasizes both positive and negative aspects of news stories. Nevertheless, the effects of ambiguous news, which includes both positive and negative information, are under-investigated. This study examines how exposure to ambiguous economic news affects uncertainty and ‘consumer confidence’. Consumer confidence refers to citizens’ evaluations of their personal economic situation and of the national economy and is an antecedent of economic behaviour. Using a two-wave national panel survey and a media content analysis, the study demonstrates that ambiguous news exposure and individual level changes in consumer confidence are linked. Our analysis suggests that the relation between exposure to ambiguous news and changes in consumer confidence is mediated by economic uncertainty. This article bridges insights from research on consumer confidence, economic psychology and media effects and unravels one of the mechanisms at play in this cross-field.