Panic, momentum and Groupthink

It’s good to see that serious academics have turned their attention to the question of whether, as my last blog questioned, the media can actually bring about further economic bad news simply by reporting it in certain ways.

When I heard Evan Davis trail an item on this on the Radio 4 Today programme, I pricked my ears up, interested to hear the methodology of measuring negative momentum caused by bad news stories.

It turned out to be something else really, with the London School of Economics’ Dr Damian Tambini and business reporter Ian King of the Times discussing the ins and outs of financial journalism, with a health warning about untrustworthy PR thrown in (by Tambini).

Indeed, Tambini and his think tank Polis’ findings of What is Financial Journalism For?  make fascinating reading, even if it does bring us no closer to any real findings as to whether reporting horrible financial news makes the day after’s news even worse.

The report details the kind of responsibilities Polis feels media should shoulder in terms of ethics. It also delves into the far more complex areas of whether the media and individual reporters should take particular care not to cause panics or sudden crises in confidence.

Polis’ interview with Robert Peston (since reprised with more theatre at the recent Commons hearing into the very same subject) on his reports of the Northern Rock collapse are hugely illuminating – they reveal his awareness of his massive responsibility to the economy and the public when live on air.

That’s a lot for one chap. I wonder if he was thinking: ‘is this what I signed up for?’ Reporting, yes. Knowing he would be held responsible for influencing the UK economy by his exact choice of words? Not quite.

I reccommend the Tambini paper to anyone interested in the complex way reporting the news affects the news itself – the roles of Panic, momentum and Groupthink (the herd mentality) – are all explored.

I also discovered from it that Harvard economist JK Galbraith was asked in 1986 by the New York Times to write an article on the speculative build-up in New York financial markets.

It was rejected by the paper as being too alarmist – shortly before the crash of October 1987 which the article predicted.

Tags: Crain's, Radio 4 Today programme

This entry was posted on Thursday, February 19th, 2009 at 6:00 pm and is filed under Andrew Spinoza, SKV Conversations. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.