The Mass Media and its Impact on Economics_ Meredith M. Price_ The University Of Southern Mississippi

Studies posit that media information has either a negative and positive affect, which in turn can impact individual’s attitude.. This paper explores how mass media functions and how medi

The Mass Media and its Impact on Economics

Meredith M Price The University Of Southern Mississippi

Mass media is suggested to be a catalyst toward economic impact Studies posit that media information has either a negative and positive affect, which in turn can impact individual’s attitude Consumer behavior research supports the idea thatnegative media content on the certain issues can cause the economy to fluctuate

This paper explores how mass media functions and how media concepts are related to economic impact Research in media impact on the economy of the

Mississippi Gulf Coast after the Deepwater Horizon oil spill is the focus of study Relating media and it’s impact on the economy is challenging but a necessary factor

to study while in pursuit of understanding other factors in economic impact and media effects The behavior of the economy can be impacted by how the media presents information towards the public

Introduction of mass media effects

Print, radio, television, Internet, and social networks are common types of media Media extends out to large masses of people and provides information to the public on various subjects, entertain, and to gratify people’s curiosities As mass media has expanded and become more obtainable—cell phones, iTouch, and laptops

—so have the influences on a person’s cognitive ability It would appear that the individual has become more reliable on consulting the media

The news media is on a 24 hours and 7 days a week cycle News is constantlystreaming on the Internet through various websites and blogs A widely accepted model of communication is the Westley-MacLean model of communication It describes how information is gathered and disseminated to the audience (Severin

and Tankard, 2001) A closer look at the Westley-Mac Lean model of communicationaids in the study of how the media functions.

(Figure 1) Westley-MacLean Model of Communication

Westley, B., and M MacLean 1957 “A conseptual Model for Communication Research.” Journalism Quarterly, 34:31-38

Westley and MacLean (1955) posit four different participating parties

involved in media communications The parties are of A (advocacy role), C

(communication), B (receiver), X (objects of orientation), and f (feedback) X’s represent “objects of orientation” which includes; events, objects, ideas, and people The Xs are within the sensory of A, B, and C The A represents the advocacy roles and observes the Xs and then transmits purposeful messages about its findings through media

C represents the communicator responsible for channel roles that are

received by B An example of this would be television channels, websites,

newspapers, etc C also functions as a “gatekeeper” which selects information from

Xs and A, and strives to satisfy B’s desire of information C then chooses what outlet/medium is appropriate for obtaining information to B roles Now with the Internet and faster means of communication, C is able to receive information from several Xs.However, creating meaning is difficult out of bias/raw information from the Xs; therefore, A is still necessary for more accurate perception, according to Westley and MacLean (1957)

The Westley-MacLean model allows messages to be purposive (with the intent of modifying B’s perception of X) or non purposive (without any intent on the part of the communicator to influence B) (Severin and Tankard, p 61, 2001) With Bbeing perceived as the public or individual groups, they need information about

their environment to help gratify self-satisfaction and help solve problems (Severin, Tankard, p 63 2001) The model also provides feedback (f) from the receiver (B) to the communicator (C) as well as from the communicator (C) back to the advocate (A) Without this connection of feedback from the different consumers there would

be a lack in information development and in construction information selection

This model is important in the understanding of how consumers take in newsmedia and how the different channels, orientations, and advocates can affect

consumer perceptions This mass communications model aids in understanding how the different theories of mass media effects could effect economic development.MEDIA EFFECTS

The effects of mass media are theoretically applicable to the fluctuations in economic development and are either direct or indirect McGuire noted several of the most commonly mentioned intended media effects are; (a) the effects of

advertising on purchasing, (b) the effects of political campaigns on voting, (c) the effects of public service announcements (PSAs) on personal behavior and social improvement, (d) the effects of media ritual on social control (McGuire, 1989) McGuire also pointed out the most commonly mentioned unintended media effects; (a) emotional behavior, (b) the impact of media images on the social construction of reality, (c) the effects of media bias on stereotyping, and (d) how media forms affect cognitive activity and style (McGuire, 1989)

In addition to these media effects, McGuire’s partner, McQuail, summarizes that the main streams of effects research of other areas of media effects are; (a) knowledge gain and distribution throughout society, (b) diffusion of innovations, (c)

socialization to societal norms, and (d) institution and cultural adaptations and changes (McQuail 1972) A more in-depth analysis will be explored on specific media effects in this body of work.

Media Agenda Setting

The concept of agenda setting set by the media is a likely factor that can influence economic development The agenda-setting function of the media refers

to the media’s capability, through repeated news coverage, of raising the importance

of an issue in the public’s mind (Severin, Tankard pg 219) McCombs and Shaw reported the first systematic study of agenda-setting hypothesis in 1972

Findings in McCombs and Shaw’s “Chapel Hill Study” supported that agenda setting can influence political campaigns (1972) Voter perception of a particular campaign platform was shaped based on what the media choose to

media-emphasis on McCombs and Shaw’s data suggested that a strong relationship

between the emphasis placed on different campaign issues by the media and the judgments of voters are to the salience and importance of various campaign topics (1972)

A precursor to McCombs and Shaw’s hypothesis suggests that what people will think the facts are, and what most people will regard as the way problems are to

be dealt with is portrayed through the media (Norton Long, p 260 1958) Also, mass media forces attention to certain issues and are constantly presenting objects suggesting what individuals in the mass should think about, know about, have feelings about (Kurt, Gladys Engle Lang p 232 1959)

Concepts that the media reported on were economic policy of the different campaigns (McCombs and Shaw 1972) These reports could influence consumer confidence The level of consumer confidence augurs consumer spending— and thus the future trajectory of the economy— and it affects a variety of political

behavior such as election outcomes, macropartisanship (Erikson, MacKuen, and Stimson 2002), presidential approval (MacKuen, Erikson, and Stimson 1992, public policy mood (Durr, 1993), congressional approval (Durr, Gilmour, and Wolbrecht 1997), and trust in government (Chanley, Rudolph, and Rahn 2000)

Additional experiments have been conducted to learn more about the effects

of media agenda setting Media agenda setting determines the criteria by which an issue will be evaluated (Iyengar, Kinder, Peters, 1982) This concept is known as priming Priming is the process in which media attends to particular issues and not others and thereby alter the standards by which people evaluate and act on an issue (Severin, Tankard p 226) The concept of priming builds on the idea that mass media does have the power to build agendas outside of its own Therefore, the media acts as a director, actor, and consumer of it’s own product

The application of agenda setting and it’s influence on economic

development can be seen in the case study of news coverage on women in the 1996 Olympic games and how the economy had a slight dip Newspaper coverage of the

1996 Olympic games primarily were of women due to the addition of two women’s events debuted which was soccer and softball, along with women’s mountain biking and beach volleyball The media emphasized on women’s progress Women also

were recognized as an important television audience NBC, the official U.S Olympic television network, sought to deliver on promised rating to advertisers by attractingthe largest possible audience and women were the target (Kinnick, 1998)

Women decided to follow the Olympic games by watching television rather than going out and shopping suggests Kinnick This in turn caused a brief moment

of loss in the month of August in the gross retails sales on a national level Little growth in economic activity was seen and some economist believe that the rise in women viewership of the Olympics set off the slowing of gross retail sales on a national level (Kinnick, 1998)

Cultivation theory, used in mass media studies, is a concept that explains how people’s perceptions, attitudes, and values change from consumption of media Exposure to the same messages that debut in the mass media produces what

researchers refer to cultivation, or the teaching of a common worldview, common roles, and common values (Gerbner, Gross, Morgan, and Signorielli, p 14 1980) Thus, Media can have a negative impact upon cognitive thinking

Psychological literature supplements the cultivation theory by suggesting that unfavorable information has a greater impact on impression than does

favorable information, across a wide variety of situations (e.g., Ronis and Lipinski 1985; Singh and Teoh 2000; Van der Pligt and Eiser 1980; Vonk 1993, 1996) Stuart

N Soroka’s (2006) research in media’s effect on economics suggests that there exists an “asymmetric responses to bad and good economic information”

Research in economics posits a prospect theory (Kahneman and Tversky 1979) Prospect theory is a choice under uncertainty, which contains a feature

called loss aversion People react more fervently towards a loss in utility than they

do towards a gain of equal magnitude (Soroka, 2006) This individual-level loss adverse behavior is evident in macroeconomic dynamics: consumption tends to drop more when the economy contracts than rise when the economy expands (Bowman, Minehart, and Rabin 1999)

Examples in media suggest that overemphasizing the prevalence of violent crime (e.g., Altheide 1997; Davie and Lee 1995; Smith 1984), and events involving conflict or crisis receive a greater degree of media attention (Bagdikian 1987;

Herman and Chomsky 1988; Parachos 1988; Patterson 1997; Shoemaker, Danielian,and Brendlinger 1991) Most relevant to the current analysis, U.S networks

regularly give more coverage to bad economic trends than to good economic trends (Harrington 1989)

The prominence of negative media coverage may be driven by the same individual-level theories such as media agenda setting, priming, and framing

Journalists are individuals, writing articles to appeal to other individuals and thus regard negative information as more important, not just based on their own

interests, but also on the interests of their news consuming audience (Soroka, 2006)

There is however, an alternative explanation for the prominence of negative news It may be that media outlets’ emphasis on negative news reflects one of the principle institutional functions in democracy: holding current Governments (and companies, and indeed some individuals) accountable (Carlyle 1841) Therefore, media is a surveillance that mainly involves identifying problems and at times over

emphasizes negative information But some scholars think it is the media’s job to do

so (David Lyon, p 21, 2007)

Surveillance of the media includes economy facts, stock market reports and the overall well being of a nation (Severin and Tankard, p 321, 2006) Surveillance function can cause several dysfunctions such as panic due to the overemphasis of issues facing a society Lazarsfeld and Merton (1948/1960) noted that “narcotizing”dysfunction when individuals fall into a state of apathy or passivity as a result of too much information to assimilate may leave many audience members with little perspective of what is normal

Studies of media effects on economic fluctuations propose that the 1990 recession, in popular belief, was widely spread by the press’s effect on people’s pessimism of the general economy (Marcelle Chauvet and Jang-Ting Guo, 2003) Negative reports on the national economy led to a fall in consumer confidence (Marcelle Chauvet and Jang-Ting Guo, 2003).1

In particular, the minutes of the Federal Open Market Committee meeting in December 1990 pointed to consumer sentiment as one of the principal contributing factors for this recession Blanchard (1993) and Hall (1993) both attribute the 1990recession to a significant drop in consumption, and speculate that consumer

sentiment may have had something to do with it

Findings conducted by Chauvet and Guo (2003) pointed out that

consumption growth did switch to a low-growth state at the beginning of the 1989

1 For example, The New York Times on April 3, 1991, reported a quote by Roger Brinner, director of research at DRI/McGraw-Hill, that “If consumers hadn’t panicked, there wouldn’t have been a recession.” In addition, the lead story in The Wall Street Journal on November 4, 1991, was entitled “Economy in the U.S Isn’t Nearly as Sour as the Country’s Mood But Pessimism Could Become Self-Fulfilling Prophecy Further Stalling Recover Can Attitude Be Everything?”

slowing of the economy (Figure 2) Consumer confidence also fell during the

slowing, as observed in all the previous low-growth phases and recessions (f1) (Chauvet and Guo, 2003) However, the probabilities of consumer pessimism based

on non-fundamentals rose only in July 1990, which coincided with the onset of this recession (Figure2) The same pattern was observed for growth in personal income,manufacturing trade and sales, and employment, whose falls coincided with the beginning of this recession Therefore, consumers’ pessimism did not seem to be a source of this recession (Chauvet and Guo, 2003)

However Chauvet and Guo (2003) notes that consumers’ pessimism may have been an important factor in intensifying and extending the 1989-1992

economic slowdown The figures created by Chauvet and Guo (2003) reveal that low consumption growth phase lagged consumers’ pessimism, and lasted until the end of the sample in 1995 Thus, the unprecedented extended slowdown could havebeen a reflection of consumers’ attitudes toward the economy after the official end

of the 1990 economic recession (Chauvet and Guo, 2003)

Chauvet and Guo (2003) proposed at the end of their research that U.S recessions and slowdowns could have been responses not to shifts in economic fundamentals, but to agents’ self-fulfilling pessimism

(Figure 2) (f1-f4 clockwise starting top left) The 1990 recession: Probabilities of consumers’

and investors’ pessimism, low

consumption and investment growth states, investment growth, 3-month T-Bill rate, growth rates of employment, personal income, and sales—NBER recessions (shaded areas) and slowdowns (- - -).

Marcelle Chauvet SUNSPOTS, ANIMAL SPIRITS, AND ECONOMIC FLUCTUATIONS Macroeconomic Dynamics,

Volume 7, Number 1 (February 2003), pp 140-169, http://ejournals.ebsco.com/direct.asp?

ArticleID=J8D8D5YBVKD44TTPFUQ6

Self-fulfilling pessimism is the result from news refraction hypothesis

suggested by McLeod and associates (1995) Their hypothesis suggests that local content of news media exposure could have a strong influence on perceptions of issues and the “closeness of home” Therefore, viewer’s doubts suppress the urge for action, and a reclusive approach is taken towards issues (McLeod et al., 1995)

A study of the media’s impact on the Mississippi Gulf Coast economy after theDeepwater Horizon oil spill was conducted to support the theory that media can potentially impact an economy

The oil spill in the Gulf of Mexico, which began after the Deepwater Horizon rig explosion on April 20th and continued to leak for another three months was a challenging event for news media to cover Unlike most catastrophes, which tend to break quickly and subside almost as fast, the spill was a slow-motion disaster that demanded constant vigilance and sustained reporting (journalism.org) Also the media had to learn how to report on the oil spill by using NOAA (National Oceanic Atmospheric Administration) maps and by consulting scientist and researchers whowere part of the response team for BP

The story on a national level consisted of three competing story lines-the role

of BP, the Obama Administration, and the events in the Gulf region The coverage of the disastrous saga along affected coastal states was in-depth Texas, Louisiana, Mississippi, Alabama, and the Florida pan handle was bombarded with journalists literally waiting on the beaches and headlining articles about how the oil was an economic, ecological, and political Armageddon