News consumers have only themselves to blame for the negative news phenomenon, find researchers in a new study, as the results show that it’s actually consumer buying habits that are driving the negative press.
The study, conducted by Professor Jill McCluskey from Washington State University and a team from the University of Leuven in Belgium, is among the first to investigate a negative news bias from the consumer, or demand side; previous studies have focused mainly on the supply side by examining media output.
The study examined how people tend to use information from news articles to enhance their well-being and avoid losses. Their model analyzed how much happiness consumers obtained from choosing either bad or good news.
The findings showed greater individual benefit from reading the bad news.
In general, this tendency creates a public preference for negative news stories, McCluskey said. “Newspapers act on this demand by reporting more bad news to attract readers and sell more papers.”
The researchers built their model on an economic theory suggesting that as a person’s wealth increases, the impact of each additional dollar diminishes.
“When you are very poor and hungry, for example, each dollar is worth a lot as it helps you buy enough food to eat,” McCluskey said. “But once you have more money and can count on regular meals, it’s the losses that will affect you more. In terms of happiness and well-being, a $1,000 loss will affect you more than a $1,000 windfall.”
The same idea applies to information appearing in newspapers, the Internet, TV, or radio. In their model, the researchers assessed the benefits or drawbacks people get from consuming a good or service — in this case, positive and negative news stories. Their findings reveal a strong human tendency to avoid risk.
McCluskey said consumers read good news to discover personal benefits from a positive event, such as an event that would improve their own income or welfare.
Reading about the success of a Fortune 500 company, for example, might help one decide to invest in their stock. Reading bad news, however, provides information on how to avoid a negative event or loss to one’s well-being. In other words, reading bad news helps consumers avoid making bad choices.
“Food scares are a good illustration as they are widely covered by the media,” McCluskey said. To protect their health, “people choose to avoid the suspected food, such as beef during the Mad Cow scare, or spinach with the E.coli outbreaks.”
Over time, news consumers, either consciously or subconsciously, continue to choose newspapers with more negative reporting. In response, news outlets take advantage of that risk aversion to maximize their profits.
Reading bad news can certainly create negative consequences of its own, however. For example, some people become depressed from reading too much bad news or develop an exaggerated fear of risk.
Bad news can also lead to extended responses to a negative event. “Even after the E. coli scare was over, people still wouldn’t buy spinach. There can be a lot of impact on growers and wasted food with these scares,” McCluskey said.
The study is published in the journal Information Economics and Policy.
Source: Washington State University