The ViewWhy we are fascinated with doom, gloom and all sorts of negative news
‘Newspapers are crammed full of bad news because that’s what people want to read and woe betide any editor that forgets this’
Are we journalists doing a poor job covering financial news? Are we biased? Do we accentuate the negative?
The answer to the last two questions appears to be yes, while the jury is out on the initial question. That, at any rate, is the conclusion of a recently published study entitled “The Kinks of Financial Journalism”, by Diego Garcia from the University of Colorado.
Basically what he found was that journalists tend to be more negative about market falls than they are positive about market rises. In other words we seem to like bad news much more than good news.
Garcia’s study focused on coverage from the New York Times and Wall Street Journal from 1905 to 2005 but there is no reason to believe that these publications are any more or less biased than others.
The more he looked the more he found that as markets rose the language of journalists’ reports contained more or the less the same degree of positivity, however market falls provoked increasingly negative reporting. The accentuating of the negative cast a spell of gloom over the way this news was delivered.
Why so? Maybe the answer lies in the fact that the public is simply more interested in bad news than good news or maybe, as the famous studies by the psychologists Kahnerman and Tversky have shown, investors tend to be much more concerned over losses than they are over missing out on opportunities for gains. Journalists therefore are rightly scared of identifying buying opportunities, in case they go wrong but losses have already happened and so there is little reticence in reporting how and why they have occurred. Or to put it another way, have you ever heard complaints about a journalist’s failure to report buying opportunities?