Mainstream Media Fights for the Little Guy in the Spirit of the Muckrackers
This article shows the ridiculous lengths that economists can go in defending the indefensible:
I. J. ALEXANDER DYCK, University of Toronto – Joseph L. Rotman School of Management
DAVID A. MOSS, Harvard Business School – Business, Government and the International Economy Unit
LUIGI ZINGALES, University of Chicago, National Bureau of Economic Research (NBER), Centre for Economic Policy Research (CEPR), University of Chicago – Polsky Center for Entrepreneurship, Graduate School of Business, European Corporate Governance Institute (ECGI)
We argue that profit-maximizing media help overcome the problem of “rational ignorance” highlighted by Downs (1957) and in so doing make elected representatives more sensitive to the interests of general voters. By collecting news and combining it with entertainment, media are able to inform passive voters on politically relevant issues. To show the impact this information has on legislative outcomes, we document the effect “muckraking” magazines had on the voting patterns of U.S. representatives and senators in the early part of the 20th century. We also show under what conditions profit-maximizing media will cater to general (less affluent) voters in their coverage, providing a counterbalance to special interests.