How Inequality Affects the Demand for and Supply of News
When the richest get richer, there is greater supply of news stories that affirm the American dream – the belief that hard work leads to success, sometimes referred to as “individualistic news.” This is one of the findings in and senior Andrew Wei and Henry Platt Bristol Professor of Economics Ann Owen’s paper, “Inequality and Bias in the Demand for and Supply of News,” published in Social Science Quarterly and available online now. The two authors also examined bias in the demand for news as inequality grows.
Using Google news searches as a measure of demand for news, they found that when inequality grows, areas that are more politically conservative also experience an increase in demand for news that has an individualistic spin. This is consistent with confirmation bias—people seek out explanations for the increase in inequality that are consistent with their beliefs.
The authors used the Lexis-Uni database of newspaper articles to explore the supply of news. They found that when the richest 1% of the population becomes richer, the supply of news that has an individualistic spin also increases. This finding is consistent with media capture—the people who own the media support more news that is in their self-interest.
Wei wrote, “In the case of income inequality, reading news stories that emphasize individualism … can cause voters to overestimate social mobility and choose inefficiently low levels of redistribution.” His research began as a Levitt Center summer research project in 2018 when his goal was to determine whether increases in income inequality cause people to seek out news stories that affirm individualism. At the end of the summer, Wei, a math and economics major, continued his research and began examining how the supply of news stories of individualism respond to economic conditions.