Markets reporters tend to focus more on the negative
Business journalists who cover the stock market are more negative about market falls than positive about market rises, reports John Authers of The Financial Times.
Authers writes, “This week, Diego Garcia of the University of Colorado at Boulder presented a paper to a conference on journalism and markets at Columbia Business School. Entitled The Kinks of Financial Journalism, it shows that journalists are biased — collectively we are more negative about market falls than positive about market rises.
“The methodology involved building a database of market reports published by the New York Times and the Wall Street Journal between 1905 and 2005, assigning a score to the choice of words on a scale from positive to negative, and then seeing how positivity and negativity of coverage correlated with moves in the Dow Jones Industrial Average. (Few other benchmarks were available a century ago).
“In theory, the relationship should be almost linear. As the market performance on any day improved, so the language in the next day’s paper would grow more positive. And equally, as the market fell more, so the coverage would grow more negative.
“But the relationship turned out to have a kink. After a while, extra increases for the market made little or no difference to the positivity of journalists’ prose; but as falls grew worse, the language grew ever more negative.”
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