Disequilibrium in the Market for Economics Reporting?

An interesting finding from a recent Gallup poll, reporting on, well, reporting. There appears to be substantial excess demand for insightful reporting on economic issues:

Obama Policy Area Most in Need of Better ReportingGALLUP

Why haven’t savvy journalists (or their editors) arbitraged away the different returns across topics?

I’ve got five possible stories:

  1. The Business Cycle: This is only a temporary phenomenon, reflecting the fact that the economy is particularly interesting right now. If this were true, one might expect circulation numbers for the Financial Times, the Wall Street Journal or The Economist to be particularly high right now. Are they?
  2. Barriers to entry: Writing about economics requires specific, and difficult-to-acquire, knowledge. Those barriers definitely exist. But economics reporting just doesn’t seem that hard, relative to writing about health, war or terrorism.
  3. Quality versus Quantity: These data speak to the quality of economic journalism, not the quantity. It’s easy to increase quantity; it is quality that is inelastically-supplied, by the few handful of journalists who actually understand what is going on.
  4. Insider-Outsider dynamics: It’s actually easy to supply more high quality economics reporting-hire some of those unemployed PhD. economists. But the insiders-the employed journalists in other departments-object, and instead, the usual norm is to move workers. When one beat needs more reporting, you typically move journalists from another area. Again, quantity can rise, but not quality.
  5. Revealed versus stated preferences: Reading about the economy is like eating vegetables. We all say we should do more of both. But we don’t actually do much of either. And so farmers don’t grow extra vegetables, and newspapers don’t produce more economics reporting.

I think number five rings true. I would be interested in data on number one (are circulation numbers for the Financial Times, the Wall Street Journal or The Economist currently particularly high?). Numbers two or three might be part of the story, but each of these only works if the dynamics of number four are part of the story.

Or perhaps you have a better explanation. Comments are open.


Ryan Sandler

I don't know about FT or the WSJ, but the Economist has enjoyed unusually good circulation compared to other magazines of late. On the other hand, I think this is a longer running trend, and reflects the overall quality of the magazine more than the economic focus.

J

Why does it have to be print? Why can't it be broadcast? Radio, even? Or web based? Or a podcast? I'm thinking NPR's Planet Money, for example.

or `Disequilibrium'

My husband reads the Times and seems to intuitively pick up on things that are really going on. He reads between the lines. Perhaps we Americans tend to be too literal. I have a friend who loves to tell jokes. I never got them and never told her cause I felt so stupid about it. I do think however that we should clearly distinguish between statistical reporting and historical reporting/real analysis. The latter is relevant to the individual, the former is not. I say this because I think we need more of the latter. It is impossible to make wise economic decisions only on the basis of stats.

Matt

Can Mr. Dubner do a follow-up post? He's actually worked as a journalist, and might have some good insights.

I do wonder if internal politics might play a factor: a news director might not be able to reasonably hire temporary hands (economics experts) while at the same time budget cuts force the organization to shed regular reporting jobs, costing loyal and devoted journalists their jobs. It might just be that increasing the quality of economic reporting would require moves that would be disastrous from a company management perspective.

htb

Option 5 seems highly likely to me, but perhaps another issue is at play: The consumers want the economic mess to be resolved, and until you can credibly report that we have recovered to pre-recession levels, then no quantity or quality of stories on the economy 'count'.

That is, you can talk all day about the economy, but the demand for a very specific economic news story -- the story of the pleasantly booming economy -- will remain unfulfilled.

Andrew

i'd be curious to know the demographic that was polled in this study.

You ask in #1 if the circulation for some economy-themed publications has increased... but there is a rather high entry cost associated with those publications.

If the demographic polled tended to center around middle-class families, they may not be the type that can afford, or would want to, spend a $100 for a subscription to a magazine or newspaper that was so narrowly focused. Especially if they already consume more generic media such as a local newspaper or national magazine like Time or Newsweek.

Mack

I think a variation on #3 should be considered: people have no basis to judge the quality of economic reporting.

Recent events have shown that reporting on economics in the short term is essentially opinion or guesswork, and even people who get something right one time don't get it right the next. That's compounded by the fact that it can take decades to sort out the underlying macro realities and for complete scenarios to play out.

Bobby G

Yeah, I like #3. I think when I watch the news or even read the paper, there are plenty of "experts" (and I use the term with dripping sarcasm) that like to go on and rail on some point or economic principle that often is being either completely misinterpreted or just flat out does not apply altogether.

I HATE it during election and/or prop season (I live in California) there are people that go on TV to have debates on the "economic impact" of these policies. Often, both sides do a terrible job, even the side I support.

I truly do wish there were more high-quality economic analyses in widespread media. I read WSJ every once in a while, and I come here and can get some interesting stuff from time to time, but I don't have an Economist subscription... I feel like I'm not getting my quantity demanded.

Quill

Unfortunately, quality economic reporting is unpleasant for people to read.

If a newspaper runs a story on a factory closing, it will likely portray the incident as 1) greedy owners, 2) bad economy (or taxes) caused by lousy politicians or 3) rapacious foreigners who work for too cheap.

You won't see a story stating that improved productivity resulted in excess capacity and that shareholders and consumers will benefit, while workers will be temporarily dislocated.

That's because most journalists are journalists because they love to write, be in front of a camera or talk to people. If they could be economists, they would - and they'd get paid about five times as much.

Mike C

Perhaps a variant on #5:

People claim they want more in-depth reporting about the economy, when they really want more reporting that agrees with their preconceived notions. Admitting that the person known as "I" may be wrong is rather difficult.

L.Benson

I think they also want more economic reporting that explains things in a way that an ordinary person can understand. With some notable exceptions, economic writing does not seem to be directed at regular folks.

Roei

@ Andrew regarding the possibility that the sample is demographically skewed. The answer seems to be no.

Here's the description from Gallup about their sampling methodology for the question:

"Results are based on telephone interviews with 1,026 national adults, aged 18 and older, conducted Jan. 20-21, 2010, as part of Gallup Daily tracking. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ?4 percentage points.

Interviews are conducted with respondents on land-line telephones and cellular phones."
(http://www.gallup.com/poll/125399/News-Media-Tepid-Ratings-Obama-Watchdog.aspx)

It seems that it's a representative national sample of American adults. They're not selectively sampling a specific social stratum, and it helps that they sample cell and land-lines.

More on the substantive issue can be found here:
http://blogs.reuters.com/felix-salmon/2010/01/30/whats-wrong-with-economic-reporting/

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Mojo Bone

Totally agree on #5; it's one thing to supply quality economic reporting-getting anyone to read it (or understand it) is another. For most folks, the economy is like the weather; people blather on about it, but no one ever really does anything.

Steve

I bet that the responses to this question closely mirror what people say is the #1 issue in politics right now.

Priming effects might be important here.

David

The poll is fundamentally flawed because it gives respondents a choice of five exclusively weighty and serious subjects. I suspect that if those polled were offered choices such as more recipes or super-model profiles (then discounting the sheepishness factor, i.e., a certain percentage will lie and choose a serious subject), both categories would trump economics and healthcare. In any event, you would expect the circulation of business publications to decline in a recession. A more accurate measure of what the public is really interested in is the circulations or unique visitors of The Economist and the FT vs People magazine or Perezhilton.com.
On the matter of where to source the best financial-journalism talent, I doubt the solution to quality reporting is to hire some redundant PhDs. Understanding economics is only half the battle; explaining it in understandable terms to the layman is the other half. Having an advanced degree rarely is a help on the latter.

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Sean O'Donnell

I would like to see more reporting on Obama's "Campaign promises" and "Accountability."

http://www.examiner.com/x-3108-Baltimore-Republican-Examiner

Jonathan

I've actually been frustrated quite a bit about this issue, so I actually started a startup devoted to finding really good economic and financial reporting: http://Newsley.com .

Writing is a difficult craft, and writing about economic issues is particularly hard. I get the impression that a lot of financial/economic writers default to reporting specific ups or down in the data. For example: "Index XYZ has been up in the last quarter" or "The numbers for XY and Z are down over the past year." And, really, who can blame reporters?

Dave

Question is worded "do a better job of reporting on the policies and practices of the Obama administration" in the areas. Is there a possibility of Obama-driven bias in answers ; either for or against. For example, anti-Obama people who think the news media is favorable for Obama, may choose an area that they think is overly Obama-biased.
Also , what is 'a better job of reporting'?
- More accurate economic predictions? - Not likely, since the lead time for assessing accuracy is very long
- Conclusions that match ones own opinions? - Much more likely
- Higher percentage of 'truth' vs. spin? A mix of the first two
- More content perceived as 'new' and 'impactful' : my choice. Better reporting to me is content that I wasn't aware of that provides impact to my thinking about the various aspects of life.

This is the first I've heard of Newsley, but I'm interested to explore it .

Will

With regards to 2 and 3, the article comments "But economics reporting just doesn't seem that hard, relative to writing about health, war or terrorism."
I would have to say it must be fairly hard since the newspapers get it wrong so often. I don't mean to pick on the times or the journal, but those are the two papers I read, so those are the ones I can talk about. I work in finance and have focused on securitization for the past 5 years so I often have direct firsthand information about a number of stories that get published.
On the occasions when I do have direct firsthand information, I notice the stories tend to have a number of factual failures, often on important material points. It's really quite bad. My friends who work in bankruptcy and other financial areas that get reported on tell me the same thing (although I don't have the firsthand knowledge to assess their judgment on these other areas). Basically, I would say that the current state of finical reporting is that reading something in the times or the journal doesn't give you very strong basis for believing that it's correct. Given the overall high standards for these papers, that's got to bug the editors and I suspect that's why you don't see more financial reporting.

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Dave

I'm going to vote for #1 and back it up with #3.

Something you didn't mention is skepticism. Even if so-called high quality economic reporting is available, people are highly skeptical of it all. Our economic establishments betrayed the public trust in allowing this mess to occur. I'm a voracious consumer of economic reporting, but I don't trust the sources in the periodicals you mention in #1.

Unfortunately, economists can make a lot of money if they cater to rich companies that have agendas for policy. It really taints the ideas of the majority of the economists.

The only people I trust implicitly on economic issues are Paul Krugman, Joseph Stiglitz and Simon Johnson. To a lessor extent I also trust George Soros.

I don't trust people like Warren Buffet, who although he's a great guy and a generous philanthropist, he has a fiduciary duty to investors to that cannot be breached by his public statements.

So trust is probably a good reason that people are not running out to subscribe to financial and economic periodicals. Economists that are not by nature altruistic are very scary and powerful people.

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