Sources of Economic News and Economic Expectations

Abstract

This article considers the process by which local economic news coverage influences individual evaluations of the economy. We improve on prior research by capturing a wider range of news sources (including national network news, national newspapers, local television news, and local newspapers) and connecting the effects of this coverage on individual level attitudes. We find that current personal financial evaluations, personal financial expectations, and short-term (12-month) expectations for the U.S. economy are related to national network coverage. Local television coverage of the economy is related to personal financial evaluations but not short-term economic expectations and local print news is important in structuring expectations of future business conditions. Overall, the findings illustrate important differences in economic coverage across media outlets and the effects of these differences on economic expectations. Exposure to different sources of economic information have significantly different effects on economic perceptions-suggesting a more complicated and nuanced role for the news media in shaping economic perceptions than indicated by previous research.

Forecasted economic change and the self-fulfilling prophecy in economic decision-making

“…In line with the proposal that economic forecasts in media news may generate a self-fulfilling prophecy effect [6,8,11–17,19,25–29,31,33–35] positive and negative economic messages caused participants to take more and less risk in the BART, respectively (Fig 2). Participants acted in accordance with the forecasted reality of the BART economy, adapting their risk taking as if the predicted change had already occurred, whereas in fact no change had occurred at all.…”

Economic News Through the Magnifying Glass

“…Economic coverage can affect individual citizens' economic perceptions (Boomgaarden et al 2011;Goidel et al 2010;Hetsroni et al 2014) as well as consumer confidence on the aggregate level (Hester and Gibson 2003;Hollanders and Vliegenthart 2011;Soroka 2006). This places a large responsibility on economic journalists and business reporters.…”

Assessing the tone of televised economic messages during economic recovery: Positive and negative, global and local

“…A relevant example comes from a study that examined the coverage of Iceland in the Israeli press throughout the 2000s, finding that most of the items addressed the sudden collapse of Iceland's economy, although this collapse captured but a small fraction of the time covered by the study (Hetsroni, 2010). Since local journalists may have better understanding of the local economy and are less acquainted with foreign markets (Goidel et al, 2010), the coverage of global markets may be less accurate in tone than the coverage of the local economy. From these observations, we formulate our first hypothesis: H1: News items referring to the local (Israeli) economy will be less negative and more accurate in tone than news items regarding the global economy.…”

“…The second is the impact that these messages may have on our behavior and actions (Greenberg, 1980, p. XII). Consumption of popular media can affect the direction and the intensity of economic expectations (Goidel et al, 2010). In this vein, Media System Dependency Theory postulates that people are guided by goals and that fulfilling these goals is contingent upon having the necessary information, which may be gleaned from a variety of sources, including the media (BallRokeach, 1985).…”

“…This question has considerable practical implications in light of the documented reliance Brought to you by | HEC Bibliotheque Maryriam ET J. Authenticated Download Date | 6/12/15 11:32 PM of viewers on TV as a source of economic information that can influence certain expectations concerning the economy (Nadeau, Niemi, Fan, and Amato, 1999). These expectations may ultimately lead to endorsing financial behaviors such as increasing savings or purchasing of high-risk shares (Goidel, Procopio, Terrell, and Wu, 2010). In this study, we attempt to resolve ongoing differences in the literature between research where a negative trend in economic news was identified (Fogarty, 2005;Ju, 2008;Soroka, 2006) as opposed to studies where the conclusion was that the tone of economic news reflects actual economic circumstances (MacKuen, Erikson, and Stimson, 1992;Sheafer, 2008).…”