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Persistent Media Bias

David P. Baron

Stanford University - Graduate School of Business

February 2004

Stanford University GSB Research Paper No. 1845

The news media plays an essential role in society, but surveys indicate that the media is widely viewed as biased. This paper presents a theory of media bias that originates with private information obtained by journalists through their investigations and persists despite profit-maximizing news organizations and rivalry from other news organizations. Bias has two effects on the demand for news. First, rational citizens are more skeptical of potentially biased news and thus rely less on it in their individual decision-making. Second, bias makes certain stories more likely than others. This paper presents a supply-side theory in which bias originates with journalists who have a preference for influence and are willing to sacrifice wages to exercise it. News organizations can control the bias by restricting the discretion allowed to journalists, but granting discretion and tolerating bias can increase profits. Citizens have a demand for news they can use in their everyday lives, but their skepticism reduces demand and leads the news organization to set a lower price for its publication the greater is the bias it tolerates. Lower quality news thus commands a lower price. Bias is not driven from the market by competition from a rival news organization nor a news organization with an opposing bias. Moreover, bias can be greater with competition than with a monopoly news organization. If citizens collectively choose regulation in place of their individual decision-making, bias increases the stringency of regulation.

Number of Pages in PDF File: 41

Keywords: microeconomics

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Date posted: April 6, 2004  

Suggested Citation

Baron, David P., Persistent Media Bias (February 2004). Stanford University GSB Research Paper No. 1845. Available at SSRN: http://ssrn.com/abstract=516006 or http://dx.doi.org/10.2139/ssrn.516006

Contact Information

David P. Baron (Contact Author)
Stanford University - Graduate School of Business ( email )
655 Knight Way
Stanford, CA 94305-5015
United States
650-723-3757 (Phone)
650-725-6152 (Fax)

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References:  16
Citations:  49

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