Social Networks and the Demand for News

20 Pages Posted: 9 Jun 2015 Last revised: 26 Sep 2019

See all articles by Lisa M. George

Lisa M. George

Hunter College, CUNY; The Graduate Center, CUNY

Christian Peukert

University of Lausanne (HEC)

Date Written: September 19, 2015

Abstract

Economic research has documented a robust, positive relationship between media consumption among minority individuals and the size of the minority population in local markets. The theoretical mechanism behind these ``preference externaltities" has been understood to be the supply incentive to cater to large groups when fixed costs or other scale economies limit the number of viable products in a local market. We demonstrate that the supply-side mechanism is incomplete: the relationship holds not just for local but also national news outlets. We extend the concept of preference externalities to the demand side, establishing a relationship between the racial composition of local communities and the tendency to seek and share information on online social networks. Using data from a sample of 35,997 internet households and a sample of 11,479 Twitter users, we show that a larger local black population is associated with both larger network size and higher utilization for individual black Twitter users relative to white Twitter users and vice versa. Our results suggest that digitization can exacerbate inequality in news consumption, but also that policies to widen broadband access might narrow the gap.

Keywords: News, Social Media, Media, Internet, Digitization, Digital Divide

Suggested Citation

George, Lisa Megargle and Peukert, Christian, Social Networks and the Demand for News (September 19, 2015). Available at SSRN: https://ssrn.com/abstract=2615771 or http://dx.doi.org/10.2139/ssrn.2615771

Lisa Megargle George

Hunter College, CUNY ( email )

695 Park Avenue
New York, NY 10065
United States

The Graduate Center, CUNY ( email )

365 Fifth Avenue
New York,, NY 10016
United States

Christian Peukert (Contact Author)

University of Lausanne (HEC) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

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