March 30, 2017
Mass media is old, and so is their bias.
Media bias is under heavy discussion at the moment, especially relating to the on-going presidential election in the US. However, the quality of discussion is not the way it should be; I mean, there should be objective analysis on the role of the media. Instead, most comments are politically motivated accusations or denials. This article aims to be objective, discussing the measurement of media bias; that is, how could we identify whether a particular media outlet is biased or not? The author feels there are not generally acknowledged measures for this, so it is easy to claim or deny bias without factual validation. Essentially, this erodes the quality of the discussion, leading only into a war of opinions. Second, without the existence of such measures, both the media and the general public are unable to monitor the fairness of coverage.
Fairness of the media is important for one main reason: the media have a strong influence on the public opinion. In other words, journalists have great power, and with great power comes great responsibility. The existence of bias leads to different standards of coverage depending on the topic being reported. In other words, the information is being used to portray a selective view of the world. This is analogous to confirmation bias; a person wants to prove a certain point, so he or she only acknowledges evidence supporting that point. Such behavior is very easy for human beings, for which reason journalists should be extra cautious in letting their own opinions influence the content of their reportage.
In addition to being a private problem, the media bias can also be understood as a systemic problem. This arises through 1) official guidelines and 2) informal group think. First, the official guidelines means that the opinions, beliefs or worldviews of the particular media outlet are diffused down the organization. Meaning that the editorial board communicates its official stance (“we, as a media outlet, support a political candidate X”) which is then taken by the individual reporters as their ethos. When the media outlet itself, or the surrounding “media industry” as a whole, absorbs a view, there is a tendency to silence the dissidents. This, again, can be reduced to elementary human psychology, known as the conformity bias or group think. Because others in your reference group accept a certain viewpoint, you are more likely to accept it as well due to social pressure. The informal dynamics are even more dangerous to objective reporting than the official guidelines because they are subtle and implicit by nature. In other words, journalist may not be aware of bias and just consider their worldview “normal” while arguments opposing it are classified as wrong and harmful.
Finally, media fairness is important due to its larger implications on information sources and the actions taken by citizens based on the information they are exposed to. It is in the society’s best interest that people resort to legitimate and trustworthy sources of information, as opposed to unofficial, rogue sources that can spread misinformation or disinformation. However, when the media becomes biased, it loses its legitimacy and becomes discredited; as a form of reactance to the biased stories, citizens turn to alternative sources of information. The problem is that these sources may not be trustworthy at all. Therefore, by waving their journalistic ethics, the mass media become at par with all other information sources; in a word, lose their credibility. The lack of credible sources of information leads into a myriad of problems for the society, such as distrust in the government, civil unrest or other forms of action people take based on the information they receive. Under such circumstances, the problem of “echo chamber” is fortified — individuals feel free to select their sources according to their own beliefs instead of facts. After all, if all information is biased, what does it matter which one you choose to believe in?
While it may not be difficult to define media bias at a general level, it may be difficult to observe an instance of bias in an unanimously acceptable way. That is where commonly accepted measures could be of some help. To come up with such measures, we can start by defining the information elements that can be retrieved for objectivity analysis. Then, we should consider how they can best be analyzed to determine whether a particular media outlet is biased.
In other words, what information do we have? Well, we can observe two sources: 1) the media itself, and 2) all other empirical observations (e.g., events taking place). Notice that observing the world only through media would be inaccurate testimony of human behavior; we draw a lot from our own experiences and from around us. By observing the stories created by the media we know what is being reported and what is not being reported. By observing things around us (apart from the media), we know what is happening and what is not happening. By combining these dimensions, we can derive
Numbers 2 and 4 are not deemed relevant for this inquiry, but 1 and 3 are. Namely, the choice of information, i.e. what is being reported and what is being left out of reporting. Hence, this is the first dimension of our measurement framework.
This dimension measures what is being talked about in the media. It measures inclusion, exclusion and frequency to determine what information the media disseminates. The two levels are topics and stories — both have themes that can be identified, then material classified into them, and counted to get an understanding of the coverage. Measuring exclusion works in the same way, except the analyst needs to have a frame of reference he or she can compare the found themes with. For example, if the frame of reference contains “Education” and the topics found from the material do not include education, then it can be concluded that the media at the period of sampling did not cover education. Besides themes, reference can include polarity, and thus one can examine if opposing views are given equal coverage. Finally, the frequency of stories measures media’s emphasis; reflecting the choice of information.
Because all information is selected from a close-to-infinite pool of potential stories, one could argue that all reportage is inherently biased. Indeed, there may not be universal criteria that would justify reporting Topic A over Topic B. However, measurement helps form a clearer picture of a) what the media as a whole is reporting, and b) what does each individual media outlet report in comparison to others. A member of the audience is then better informed on what themes the media has chosen to report. This type of helicopter view can enhance the ability to detect a biased information choice, either by a particular media outlet or the media as a whole.
The question of information choice is pertinent to media bias, especially relating to exclusion of information. A biased reporter can defend himself by arguing “If I’m biased, show me where!”. But bias is not the same as inaccuracy. A biased story can still be accurate, for example, it may only leave some critical information out. The emphasis of a certain piece of information at the expense of other is a clear form of bias. Because not every piece of information can be included in a story, something is forcefully let out. Therefore, there is a temptation to favor a certain story-line. However, this concern can be neutralized by introducing balance; for a given topic, let there be an equal effort for exhibiting positive and negative evidence. And in terms of exclusion, discarding an equal amount of information from both extremes, if need be.
In addition to measuring what is being reported, we also need to consider how it is being reported. This is the second dimension of the measurement framework, dealing with the formulation of information.
This dimension measures how the media reports on the topics it has chosen. It is a form of content analysis, involving qualitative and quantitative features. Measures cover interview type of settings, as well as various reportages such as newspaper articles and television coverage. The content can be broken down into pieces (questions, paragraphs, sentences) and their objectivity evaluated based on both substance and tone. An example of bias in substance would be presenting an opinion as a fact, or taking a piece of information out of context. An example of biased tone would be using negative or positive adjectives in relation to select objects (e.g., presidential candidates).
Presenting loaded headlines and text as percentage of total observations gives an indication of how biased the content is. In addition, the analyst can evaluate the general sentiment the reportage portrays of key objects — this includes first identifying the key objects of the story, and then classifying their treatment on a three-fold scale (positive, negative, neutral).
I mentioned earlier that agreeing on the observation of bias is an issue. This is due to the interpretative nature of these measures; i.e., they involve a degree of subjectivity which is generally not considered as a good characteristic for a measure. Counting frequencies (e.g., how often a word was mentioned) is not susceptible to interpretation but judging the tone of the reporter is. Yet, those are the kind of cues that reveal a bias, so they should be incorporated in the measurement framework. Perhaps we can draw an analogy to any form of research here; it is always up to the integrity of the analyst to draw conclusions. Even studies that are said to include high reliability by design can be reported in a biased way, e.g. by re-framing the original hypotheses. Ultimately, application of measurement in social sciences remains at the shoulder of the researcher. Any well-trained, committed researcher is more likely to follow the guideline of objectivity than not; but of course this cannot be guaranteed. The explication of method application should reveal to an outsider the degree of trustworthiness of the study, although the evaluation requires a degree of sophistication. Finally, using several analysts reduces an individual bias in interpreting content; inter-rater agreement can then be calculated with Cohen’s kappa or similar metrics.
After assessing the objectivity of the content, we turn to the source. Measurement of source credibility is important in both validating prior findings as well as understanding why the (potential) bias takes place.
This dimensions measures why the media outlet reports the way it does. If individual and organizational affiliations are not made clear in the reportage, the analyst needs to do work to discover them. In addition, the audience has shaped a perception of bias based on historical exposure to the media outlet — running a properly sampled survey can provide support information for conclusions of the objectivity study.
The work of journalists is sometimes compared to that of a scientist: in both professions, one needs curiosity, criticality, ability to observe, and objectivity. However, whereas scientists mostly report dull findings, reporters are much more pressured to write sexy, entertaining stories. This leads into the the problem of sense-making, i.e. reporters create a coherent story with a clear message, instead showing the messy reality. The sense-making bias in itself favors media bias, because creating a narrative forces one to be selective of what to include and what to exclude. As long as there is this desire for simple narratives, coverage of complex topics cannot be entirely objective. We may, however, mitigate this effect by upholding certain principles.
I suggest three principles for the media to uphold in their coverage of topics.
First, the media should have a critical stance to its object of reportage. Instead of accepting the piece of information they receive as truth, they should push to ask hard questions. But that should be done in a balanced way – for example, in a presidential race, both candidates should get an equal amount of “tough” questions. Furthermore, journalists should not absorb any “truths”, beliefs or presumptions that affect in their treatment of a topic. Since every journalist is a human being, this requirement is quite an idealistic one; but the effect of personal preferences or those imposed by the social environment should in any case be mitigated. The goal of objectivity should be cherished, even if the outcome is in conflict with one’s personal beliefs. Finally, the media should be independent. Both in that it is not being dictated by any interest group, public or private, on what to report, but also in that it is not expressing or committing into a political affiliation. Much like church and state are kept separate according to Locke’s social contract as well as Jefferson’s constitutional ideas, the press and the state should be separated. This rule should apply to both publicly and privately funded media outlets.
The status of the media is precious. They have an enormous power over the opinions of the citizens. However, this is conditional power; should they lose objectivity, they’d also lose the influence, as people turn to alternative sources of information. I have presented that a major root cause of the problem is the media’s inability to detect its own bias. Through better detection and measurement of bias, corrective action can be taken. But since those corrective actions are conditioned to willingness to be objective, a willingness many media outlets are not signalling, the measurement in itself is not adequate in solving the larger problem. At a larger scale, I have proposed there be a separation of media and politics, which prevents by law any media outlet to take a political side. Such legislation is likely to increase objectivity and decrease the harmful polarization that the current partisan-based media environment constantly feeds into.
Overall, there should be some serious discussion on what the role of media in the society should be. In addition, attention to journalistic education and upholding of journalistic ethics should be paid. If the industry is not able to monitor itself, it is upon the society to introduce such regulation that the media will not abuse its power but remains objective. I have suggested the media and related stakeholders provide information on potential bias. I have also suggested new measures for bias that consider both the inclusion and exclusion of information. The measurement of inclusion can be done by analyzing news stories for common keywords and themes. If the analyst has an a prior framework of topics/themes/stories he or she considers as reference, it can be then concluded how well the media covers those themes by classifying the material accordingly. Such analysis would also reveal what is not being reported, an important distinction that is often not taken into account.
March 29, 2017
With this post, I’m anticipating the next phase of debate on European financial crisis, as the problem of asynchronous economies isn’t going away. The continent is currently riddled with the refugee crisis, but sooner or later the attention will return to this topic which hasn’t been properly dealt with.
In brief, there are two countries:
Both countries, however, have the same monetary policy. They cannot control money supply or key interest rate by themselves according to their specific needs, but these come as a some kind of average for both – this “average” is not optimal for either, or is optimal for one but not the other.
As Milton Friedman asserted long ago, the differences of such kind result in an un-optimal currency area. We’ve seen his predictions take form in the on-going European financial crisis which in this case results from the un-optimal property of the European Monetary Union (EMU).
Some potential solutions are:
1. Fiscal transfers from surplus to deficit countries — seems impossible politically, and also leaves the moral hazard problem wide open (this solution suffers from disincentive to make structural reforms, and is dangerous in the sense it can bring hatred between EMU countries)
2. Budget control to European Central Bank (ECB) — in this case, the central bank would exercise supreme power over national budgets, and would approve only balanced budgets. From a simplistic point of view, this seems appealing due to the fact that it would it forcefully prevent overspend, and there would be no need for the dreaded fiscal transfers.
However, the problems with this approach are the following:
a. It takes away the sovereignty of nations — not a small thing at all, and non-federalists like myself would reject it only for this reason.
b. The economic issue with it is the ‘shrinking economy’ problem – according to Keynesian logic, the state needs to invest when the private sector is in a slump to stimulate the economy. Failing to do so risks a vicious cycle of increased unemployment and decreased consumption, resulting in a shrinking, not growing GDP.
So, I’m not exactly supporting the creation of balanced budgets at the time of distress. The only way it can work is as form of “shock therapy” which would force the private sector to compensate for decreasing public sector spend. Which, in turn, requires liquidity i.e. capital. Unfortunately, lack of trust in a country also tends to reflect to companies in that country in the form of higher interest rates.
Which leads to me another potential solution which again looks eloquent but is a trap.
3. Credit pooling (euro-bonds)
This is just sub-prime once again. In other words, we take the loans of a reliable country (credit rating A) and mix them with an unreliable country (credit rating C), and give the whole “package” and overall rating of B which seems quite enticing for the investors buying these bonds. By hiding the differences in ability to handle debt, the pool is able to attract much more money. In brief, everyone knows this leads to the dark side of moral hazard and will eventually explode.
For this reason, I’m categorically against euro-bonds. In fact, the European debt crisis was in large part due to investors treating sovereign bonds as if they were joint bonds, granting Greece lower interest rates than in the case it would not have been an EMU member state. Ironically enough, some people actually appraised this as a positive effect of the monetary union.
So, what’s the final solution then? I think it’s the road of enforcing the subsidiarity principle, in other words re-instituting economic power to local governments. The often evoked manifestation of this, dissolution of euro, could potentially be avoided by using the national banks (e.g., Bank of Greece) as interest-setters, while the ECB would keep in its control the supply of money.
I was even considering this would be given to national banks, but the risk of moral hazard is too big, and it would result in inflation concerns. But controlling the key interest rate would be important, especially in the sense that it could be set *higher* in “good countries” than what they currently have. Consider a high interest rate (i.e., low credit expansion) in Germany and a low interest rate (i.e., high credit expansion) in Greece; the two effects could cancel each other out and repel the fear of inflation.
However, the question is – are the “good countries” willing to pay a higher interest rate for the “bad countries'” sake? And would this solution escape moral hazard? For it to work, ECB would either credibly commit to the role of the lender of last resort, or then become the first lender. In either case, we seem to recursively go back to the risk of reckless crediting (unless national banks would do a better job in monitoring the agents, which they actually might do).
In the end, something has to give. I’ve often used the euro-zone as an example of a zero-sum game: one has to give, so that the other can receive. In a such a setting, it is not possible to create a solution which would result in equal wins for all players. Sadly, the politicians cannot escape economic principles – they are simply not a question of political decision-making. The longer they pretend so, the larger the systematic risks associated with the monetary union grow.
DSc. in Econ. and Business Adm.
Turku School of Economics
The author has been following the euro-crisis since its beginning.
March 29, 2017
The struggle against moral hazard in banking is constant and real. There’s no turn-key solution for eliminating it, but it must be kept in mind at all times by policy makers.
Consider the following citation from Wikipedia:
“The role of the lender of last resort, and the existence of deposit insurance, both create moral hazard, since they reduce banks’ incentive to avoid making risky loans. They are nonetheless standard practice, as the benefits of collective prevention are commonly believed to outweigh the costs of excessive risk-taking.”
This structural problem, similar to that of the problem of the commons, drives individual bankers into competing with risks. It’s an escalating situation in which one banker takes a slightly larger risk; after seeing this one fares okay, another banker takes again a marginally increased risk position, and so on. As a result, the overall risk position of the market escalates (little by little), until one trigger event causes a collapse.
Because there is a lender of last resort, the risks for the bankers are mitigated (as long as there are enough bankers who participate in “bidding up” the risks). Because there is deposit insurance, the risk for the private individuals is eliminated as well, so they continue putting their money on the “roulette table” of the (rationally) greedy banker. The lender of the last resort will impose some more regulation, and the bankers promise to behave nicely.
However, there are no fixed threshold rules in how the financial markets work and so “boiling the frog” begins all over again.
In my opinion, the best way to counter this effect of excessive risk taking is to move the collective risk at individual risk level, so that bankers would be privately responsible for their bank’s rescue – this would take the form of losing banking license and/or private assets.
This might lead, in cases of crises, in exchange of an entire generation of bankers, but this would only be fair; at good times, they are healthily compensated, so at bad times of their own doings, they must bear the consequences. Moral hazard, by definition, arises when there is a potential that the interests of the agent and the principal differ – by aligning the interests, the problem perishes. The same effect works in reverse; in this case aligning the cost of reckless behavior.
The author is a university teacher at the Turku School of Economics. His “hobby” is to keep track of the euro-crisis.