The effect of media presentation on the formation of economic expectations: Some initial evidence

Abstract

This paper provides some initial evidence on the sensitivity of economic expectations to differences in media reporting. It reports the results of an experiment in which 120 undergraduate students were selectively exposed to different media reports of identical U.S. Department of Labor economic news releases and then asked for their projections concerning future states of the economy. A total of 36 different media stories were used from three media sources - The CBS Evening News, The Wall Street Journal and the Washington Post. The subject's monetary rewards were a function of the accuracy of their economic predictions. The authors found that differences in presentation of the same economic data can have a significant effect on expectations, as the CBS television and the Wall Street Journal presentations resulted in significantly less accurate sets of expectations regarding short-term future unemployment than did the Washington Post presentations.