Is media bias making the economy worse?

Transferred from Quriosity 2/27/09:

Recently I raised the very gloomy question whether the whole economy is one big bubble.

This got me thinking about the roles of optimism and pessimism in the ups and downs of the economy. Often I hear people claim (or at least express the fear) that all the pessimistic media coverage about the current economic turmoil is actually making things worse. A cynic might point to this claim as yet more evidence of Bubbleconomics at work.

This article by Faye Mallett of the Galt Global Review raises the question,

Could media be held legally liable if exaggerated reports of the global economic crisis prove to further decrease consumer confidence and actually worsen the situation?

(The date of Mallett’s article is given as January 13, 2008, but I’m pretty sure 2009 is meant, so the article is probably more current than one might think.)

Mallett cites research supposedly demonstrating that the media are biased toward economic pessimism in the current economic crisis. On the other hand, media during the Great Depression “invoked a much more positive and optimistic outlook,” she writes.

I read a certain irony into that: Is it possible that the overly positive press in 1929 blinded people to the reality of how bad things really were?

As a source, Mallett references a report from the Business & Media Institute (BMI), “The Great Media Depression.” BMI’s web site describes the organization as devoted to “analyzing and exposing the anti-free enterprise culture of the media.”

AB — 23 February 2009

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