It is a phenomenon as ubiquitous as it is elusive: the economy. When asked, most people have an idea — by and large — of how the national economy is doing. Some have personally experienced certain economic advancements or setbacks or know people who recently found or lost a job. However, more than by such first‐ or second‐hand experiences, people learn about the economic situation by reading and watching the news.
This idea is empirically confirmed by research showing how negative economic news leads to lower levels of consumer confidence, above and beyond the impact of real economic trends (e.g., Blood & Philips, 1995; Hollanders & Vliegenthart, 2011). But while negative news leads to more economic pessimism, positive news does not evoke the equivalent counter-effect (Soroka, 2006), pointing to asymmetric public responsiveness. Economic perceptions, in turn, are found to be an important predictor of political attitudes. When people think positively about the national economic situation, they also tend to support the government (Soroka, 2014).
So economic news is important. But how objective is it? Previous studies have suggested a negativity bias in economic news reporting: volumes go up when the economy goes down, and the content tends to be disproportionately negative (see this literature review by Mark Boukes, Rens Vliegenthart and me).
In a study recently published in Communication Research, Mark Boukes and I look at the interactions between real economic trends and economic news coverage and how this interrelation consequently affects public opinion. We analyze all economic news (127,120 articles) published in the seven most-read Dutch newspapers from 2002 to 2015.
Figure 1 shows how the real economy (measured by means of the CLI series, an OECD developed indicator of the national economic situation) and the volume of economic news develop over time. Both series are based on monthly numbers and show a strong negative correlation: The better the economy performs, the less is written about it, as is reflected in the low number of news items during prosperous year 2006. When the economy goes down, however, the volume of economic news goes up, which is illustrated by the very high peak in news articles during crisis year 2008.
While it might come across as only logical that journalists devote more attention to negative economic trends compared to positive ones – they act as watchdogs after all – this negativity bias is at odds with other media functions such as informing the citizenry correctly (Strömbäck, 2005). This is all the more relevant since the public is much more responsive to negative economic information than to positive stories. Figure 2 shows how people’s economic expectations for the future and the negative tone in economic news content develop over time. People were most pessimistic about the economic future when the financial crisis broke out (2008) and during the Eurozone crisis (2011). The news, that from 2008 onwards increased in terms of volume (Figure 1), also became much more negative in tone.
Our analyses show that bad economic news makes people more pessimistic towards the economic future. However, in contrast, good economic news does notlead to more economic optimism among citizens. In fact, good news does not provoke any effect. This asymmetric public responsiveness is present under all economic conditions: people respond to negative news but not to positive stories.
Remember that we deal here with economic expectations for the future. When we run the same analyses but take economic evaluations of the past as our dependent variable, we find that the impact of economic news is much more limited. However, since research shows that economic expectations are a crucial predictor of political (voting) behavior (see for examplezie Erikson, MacKuen & Stimson, 2000), the double negativity bias – on the level of both journalists and the news consuming audience – makes that economic news coverage has potentially far reaching implications.
Alyt Damstra is a PhD student at the Amsterdam School of Communication Research. The economy, the news and the public was recently published in Communication Research, an overview of the literature on economic news (effects) was recently published in Sociology Compass.