1/31/2005

Is the media telling us the truth?

In a recent article "Iraq election helps the dollar" the media tells us how the dollar gained strength compared to the yen going from ¥103.37 to ¥103.43 early Monday. They assume such a jump is due the recent elections in Iraq. My question is the dollar really “firmer today”?

So I went to another website x-rates.com to inquire about this sudden strengthening of the U.S. dollar. From January 28 to January 31 three out of five major currencies actually gained against the dollar including the European Euro, Canadian dollar, and Austrian dollar. Another currency the British pound stayed the same. According to x-rates.com only one out of five major currencies the Japanese yen gained favor to the U.S. dollar.

So my mind is left with questions like? Is the media out for consumers’ best interests? Do they feed us information that might be tampered with? And how much does our economy depend on the media?

8 comments:

Fred said...

I think that it is pretty much common knowledge that the media is full of "BS." You can't trust half the things you see, read, or hear. There is almost always some truth to it but it is so skewed and shaped for sharp ears that by the time it is presented to the people it is thrown way out of proportion.

Perhaps the yen has just experienced a little dip in the market but I'll have to agree that the U.S. Dollar has definitely not gotten stronger. I can remember when the Euro first came out in 2001 and one dollar was worth one euro and fourteen cents. The dollar was clearly stronger that the euro but now it's about the opposite. As a matter of fact, one dollar now is worth a euro and thirty cents.

heather said...

It is just what you would expect from the media these days. It is interesting to see that if you just look a little deeper into a story like this you find that key facts were ignored. The media is obsessed with Iraq and loves to make broad assumptions just to be able to tie in that country somehow.

June said...

How much does our economy depend on the media? I would have to say quite a bit. Consumers buy and sell around what is taking place in the media. So, how come the media reports are so often a little bit off?

Perhaps it is because the media is supplying what the general public demands. Citizens want to have confidence in the American economy. If they have confidence they spend more which strenghtens the economy. The fact the media may distort the truth has a definate impact on the economy, but it could be a good impact. After all, the average consumer gete their infomation from NBC, not the Wall Street Journal.

Jane said...

The Media is looking for ratings, plain and simple. Not necessarily economically related, but a few years ago in Florida, there was a panic in regard to shark attacks. The reason was that the media had nothing better to report at the time, so they covered all of the shark attacks. What they didn't say amidst wide-spread panic, was that the actual number of shark attacks that year was below average ... they just didn't typically report about them.

As far as our economy, or consumers, being influenced by the media, I offer up for example, my child. A year or so ago, a Go-Gurt commercial aired showing a boy eating one of these fun yogurts and then crawling all over the walls and ceiling. Next visit to the store comes with a request for Go-Gurts. Naturally, I buy them, I'm thrilled my child wants to eat yogurt. However, my child was extremely disappointed when they "didn't work." Now, this is an example of a child ... however, how do we react when we see or hear something on the news or ads that we really want to see or hear, or something that seriously gets our goat? Is it in much the same way, simply on a different level?

Emily said...

I am in agreement that the media tends to bend the truth for the ratings. The media is a good example of how economics works in relation to the supply and demand curves. As was pointed out in the comments above the more "bent" the truth is the more of a demand there seems to be. Not to many people cared about the sharks until the media made a big deal (supply) which in turn made the demand for the shark information go up.

Dr. Tufte said...

This is a common problem for students to have difficulty understanding.

As near as I can figure, financial reporters feel compelled somehow to attribute all movements in asset prices (like exchange rates) to some arbitrary event that occurred that day. Students who are earnest and inexperienced at this think these pronouncements are worthwhile. My experience is that they're not.

On the other hand, what the media is engaging in is cheap talk. They can say just about anything they want linking events to financial news without being right - or wrong. So, they can use this cheap talk to differentiate themselves from their competitors without doing themselves any potential harm. For example, a pro-Iraq station could associate events in Iraq with positive economic outcomes, and become known and watched for that perspective (even if it isn't worth much).

P.S. Jane's story should get extra credit for making me LOL!

Isaac said...

Dr. Tufte stated that the media in this post is engaging in cheap talk. I agree with what he said. The number one objective of the media is to attract people to watch their shows. In order for them to accomplish this objective, they sometimes need to report things that people want to hear. For example, the post suggests that the media covered the gain of the dollar vs. the yen but failed to mention the other four currencies which are getting stronger against the dollar. They pick and chose their stories and the way they want to tell them.

Dr. Tufte said...

Isaac has taken this in a different direction.

Here goes: I think an underappreciated problem with the legacy media is that we don't see how long it took them to put together a story. If the producer/reporter wants to present an unusual viewpoint, they can always find someone to espouse it, it just might take longer to find them. I'd like to know how much leg work they had to go through to find those people.