The Political Economy of Mass Media

Abstract

Introduction In the last decade, a sizable number of economists have begun to study the behavior and political effects of mass media. In this survey, we propose a way to organize this body of research, we attempt to summarize the key insights that have been learned so far, and we suggest potentially important open questions. We structure the discussion in sections covering background, transparency, capture, informative coverage, and ideological bias. Section 2.0 begins with an overview of how economics and other disciplines approach this field and defines the scope of this survey. Section 3.0, discusses the benefits and costs of transparency in politics: Under which situations do voters benefit from receiving more information? Section 4.0 addresses under which conditions the government will prevent the media from performing its information-provision task. Media capture is a present or latent risk in most developing and many developed countries. We present a theory of endogenous capture and survey the growing empirical literature on the extent and determinants of capture. As demonstrated herein, different sources of evidence provide support for the idea that ownership plurality is the most effective defense against capture. Section 5.0 discusses a crucial theme in media studies – namely, how informative media coverage affects political accountability and government policy. A model of policy choice with endogenous media coverage supplies an array of testable implications, used to organize the existing empirical work. The key questions are: What drives media coverage of politics? How does this coverage influence government policy, the actions and selection of politicians, and the information levels and voting behavior of the public?