Media and Policy EC307 ECONOMIC DEVELOPMENT Dr. Kumar Aniket University of Cambridge & LSE Summer School Lecture 2 created on June 30, 2009
READINGS Tables and figures in this lecture are taken from: Djankov, S.,McLiesh, C., Nenova, T., and Shleifer, A. (2003). Who owns the media? Journal of Law and Economics, XLVI. Reinikka, R. and Svensson, J. (2004). The power of information: Evidence from a newspaper campaign to reduce capture of public funds. World Bank, Mimeo. Besley, T. and Burgess, R. (2002). The political economy of government responsiveness: Theory and evidence from India. Quarterly Journal of Economics, 117(4):1415 1451. Class based on Besley, T. and Burgess, R. (2002). The political economy of government responsiveness: Theory and evidence from India. Quarterly Journal of Economics, 117(4):1415 51.
Who owns the media? Question: How should the media be organised?... as a monopoly or as a competitive industry?... state owned or privately owned? The paper: - cross-country data on media ownership - state ownership of media associated with poorer quality governments and worst outcomes - a cross-section analysis
MEDIA OWNERSHIP PATTERN Paper finds that 2 dominant forms in which media tends of be organised are: State Owned Concentrated Private Ownership - lure of owning a media outlet higher than other kind of firms - Widely held firm often grabbed up by controlling families e.g., Rupert Murdoch & News Corp., Silvio Berlusconi & Fininvest. TV Broadcast Regulation: versus higher fixed cost for TV, under-provision by market? versus easier to censor state owner live TV
HOW SHOULD MEDIA BE ORGANISED? Public Choice Theory: Government (bearaucrats & politicians) maximise their own welfare Case against state s monopoly on media: distort / manipulate information to entrench incumbents preclude voters & consumers from making a informed decision undermine democracy & markets Public Interest Theory: Government maximise consumer welfare Case for state s monopoly on media: information is a public good (non-rival & non-excludable) increasing returns to scale issues dissemination of unbiased information to the ignorant consumer
HOW SHOULD MEDIA BE ORGANISED? Public Choice Theory: Government (bearaucrats & politicians) maximise their own welfare Case against state s monopoly on media: distort / manipulate information to entrench incumbents preclude voters & consumers from making a informed decision undermine democracy & markets Case for privately held media: Source of alternative view / information Helps in choosing amongst political candidates and good and services Competition Unbiased accurate information on average c Kumar Aniket
Figure 4. Newspaper and TV ownership
Figure 2. TVN (Norway)
TABLE 6 Media Freedom ( N p 97 Countries) Variable Press, by Share State Ownership Television, by Share Radio Gross National Product per Capita State-Owned Enterprise Index Autocracy Primary School Enrollment Constant R 2 Journalists jailed, RSF a.0865 (.0562) Media outlets closed.0674 (.0543) Journalists jailed, CPJ b.4539** (.1592) Internet freedom.4231** (.1546).0272 (.0428).0524 (.0738).4069* (.1604).1297 (.1184).0141 (.0224).0276 (.0425).1343 (.0802).0208 (.0443).0013 (.0010).0022** (.0008).0021* (.0009).0019 (.0018).0022 (.0013).0025 (.0017).0067 (.0038).0125** (.0041).0102** (.0039).0011 (.0022).0031 (.0029).0025 (.0025).0018 (.0048).0026 (.0049).0040 (.0050).0033 (.0060).0006 (.0048).0008 (.0049).0017 (.0179).0016 (.0182).0037 (.0179).0032 (.0121).0069 (.0123).0096 (.0130).0531 (.0575).0952 (.0652).1162 (.0642).0488 (.0550).1247* (.0604).1039* (.0462).1121 (.2243).0455 (.2249).1441 (.2008).3693 (.1952).5832** (.1884).6516** (.1558).0004 (.0009).0002 (.0009).0001 (.0008).0012** (.0004).0009* (.0004).0009* (.0003).0030 (.0025).0028 (.0026).0022 (.0029).0020 (.0024).0010 (.0024).0008 (.0025).0581 (.0979).1272 (.0776).1890** (.0683).0418 (.0658).1180 (.0937).0868 (.0593).2107 (.3250).2270 (.3506).1423 (.3318).8550** (.2950).5052 (.2835).3522 (.2700).1678.1362.1348.1040.0947.0899.2106.1822.1324.4321.3347.3265 Note. Values are the results of ordinary least squares regressions using four dependent variables. All regressions are run for press, television, and radio separately. We control for gross national product per capita, the state-owned enterprise index, autocracy, and primary school enrollment. Table 1 describes all variables in detail. Robust standard errors are shown in parentheses. a RSF p Reporters sans Frontières. b CPJ p Committee to Protect Journalists. Significant at the 10% level. * Significant at the 5% level. ** Significant at the 1% level.
TABLE 7 Political and Economic Freedom Variable Press, by Share State Ownership Television, by Share Radio Gross National Product per Capita State-Owned Enterprise Index Autocracy Primary School Enrollment Constant R 2 N Political rights Civil liberties Corruption Security of property.1804** (.0612).1468** (.0529).0801 (.0451).2716** (.0714).1161 (.0680).0671 (.0660).0236 (.0491).0243 (.0613).0042 (.0419).0162 (.0395).0002 (.0382).0310 (.0421).0107** (.0020).0128** (.0020).0123** (.0020).0104** (.0018).0120** (.0017).0117** (.0018).0188** (.0019).0194** (.0020).0195** (.0019).0115** (.0018).0138** (.0018).0137** (.0018).0016 (.0071).0016 (.0078).0018 (.0076).0006 (.0063).0001 (.0070).0028 (.0069).0096 (.0070).0115 (.0072).0108 (.0070).0316** (.0078).0350** (.0082).0373** (.0090).7819** (.0792).8351** (.0701).9045** (.0667).5377** (.0756).5969** (.0694).6420** (.0598).0804 (.0500).1483** (.0442).1343** (.0418).1239 (.1047).0324 (.1228).0588 (.1093).0005 (.0007).0007 (.0008).0011 (.0009).0005 (.0007).0007 (.0007).0010 (.0008).0006 (.0008).0009 (.0009).0008 (.0009).0018* (.0009).0009 (.0008).0007 (.0009).1039 (.1122).1630 (.1222).3366** (.1164).0653 (.1084).0220 (.1189).1445 (.1023).8204** (.0903).9509** (.1048).9169** (.1060).7615** (.1476).4582** (.1534).3713 (.1459).8276 97.8144 97.8072 97.7718 97.7547 97.7514 97.7711 95.7642 95.7637 95.6697 91.5929 91.5941 91
Risk of confiscation.2146** (.0788) Quality of regulation Number of listed firms.5400** (.1856).0271 (.0104).1442 (.0729).1120 (.1652).0147 (.0116).0488 (.0377).0425 (.1019).0080 (.0076).0064** (.0017).0090** (.0020).0081** (.0018).0204** (.0046).0255** (.0048).0249** (.0046).0010** (.0003).0013** (.0003).0013** (.0003).0047 (.0095).0039 (.0098).0051 (.0100).0620** (.0178).0686** (.0197).0698** (.0207).0032 (.0025).0032 (.0027).0024 (.0023).1140 (.1037).0818 (.1156).0060 (.1121).5461 (.2433).8429** (.2628).8932** (.2341).0063 (.0136).0159 (.0142).0274 (.0193).0056 (.0017).0058** (.0016).0059** (.0018).0007 (.0025).0021 (.0023).0022 (.0023).0000 (.0001).0001 (.0001).0001 (.0001).6445** (.1896).6774** (.1935).8142** (.2044).5779 (.3528) 1.0931** (.3605) 1.1859** (.3212).0258* (.0129).0130 (.0137).0209 (.0199).5369 81.5037 81.4855 81.6522 97.6088 97.6076 97.1653 97.1333 97.1286 97 Note. Values are the results of ordinary least squares regressions using eight dependent variables. All regressions are run for press, television, and radio separately. W control for gross national product per capita, the state-owned enterprise index, autocracy, and primary school enrollment. Table 1 describes all variables in detail. Robus standard errors are shown in parentheses. Significant at the 10% level. * Significant at the 5% level. ** Significant at the 1% level.
The power of information: Evidence from a newspaper campaign to reduce capture of public funds Uganda: A public expenditure survey revealed in 1995 that only 20% of funds leaving the Education Ministry were reaching primary schools. By 2001, it had risen to over 80%. What accounted for this dramatic reduction in leakage of funds? - Ugandan Government responded to the 1995 leakage rate news by trying to make the system of public funding more transparent - Central government started publishing newspaper accounts of monthly transfers of funds to local district governments The paper links the newspaper campaign to the (dramatic) reduction in leakage of funds
CONCLUSIONS Paper explores that problem in delivering education in places with weak institutional environments Not explicit how information is actually used by parents, teachers etc. We need to think more carefully about theories that link provision of information to a lowering in leakage Problem: All schools potentially exposed to the newspaper campaign. May be, it is not the information but how schools & communities react to information that matters. e.g. you could get same result just because schools nearer to newspaper outlet are better connected & lobby harder to obtain the missing education funds In short, results consistent with a number of stories.
Political Economy of Government Responsiveness Does media make the state more responsive to the needs of the electorate? Role of information transmission in highlighting an issue and making it salient to voters Possibility that salience for a minority leads to public action Model: How media development and democracy can create incentives for incumbent governments to respond to crises Empirics: Media s influence on Indian state government s response to droughts & floods using panel data from 1958-92 Suggests that media improves political accountability
Government responsiveness is a key issue in low income countries where populations may rely on state action for survival due to frequent shocks, i.e., droughts and floods What determines government responsiveness? - i.e., whether it responds via relief expenditures or public food distribution? Analysis suggests that political participation & competition important to responsiveness Responsiveness increases with newspaper circulation - allows citizens to monitor incumbent s current policy action - indicates whether they will be protected in the future Both democracy and the free flow of information appear to be important in ensuring that politicians respond to the citizen s needs
THEORETICAL FRAMEWORK The model links incumbent s actions & re-election incentives by supposing that voters use observations about incumbent effort as information about the incumbent s underlying type. Incentives work best for opportunistic incumbents who respond when it is in their interest to do so. By exerting effort, they distinguish themselves from the dead-beat incumbents who do not respond at all. And, crucially, they are more willing to do this when their actions are visible due to media.
Incumbent wins if γ σ s(e,m,β) }{{} + (1 γ) v }{{} > 1 2 no. of vulnerable votes no. of non-vulnerable votes where s(e,m,β)= β p(e,m) }{{} informed shocked voters +(1 β) q(e,m) }{{} informed non shocked voters γ: proportion of vulnerable citizens β: fraction of needy in the vulnerable population - experience a shock that can be mitigated by public action e: Incumbent politician s effort m: media activity q(e, m) informed needy p(e, m) informed non-needy
Proposition: Effort by an opportunistic incumbent is higher if (a) voters have greater media access (high m) (b) there is higher turnout in elections (high σ) (c) there is a larger vulnerable population (high γ) (d) political competition is more intense (low b). A larger needy population raises incumbent effort if p e (e;m) > q e (e;m).
EMPIRICS Panel Data Regression of the form: g st = α s + β t + δs st + γ(z st )(s st )+φ z st + u st g st measure of government responsiveness (public food distribution, calamity relief expenditure) α s state fixed effects β t year fixed effects s st measure of shocks (proxy for proportion of vulnerable voters affected by the shock) z st economic, political and media variables that may affect g st φ government activism i.e., redistribution in response to long term food imbalances γ government responsiveness to recent shock c Kumar Aniket
Need for government intervention food grain production per capita... Figure I real per capita food damage to crops... Figure II Media development newspaper circulation (aggregate & language vise) varies significantly across space and time in India... Figure III allow us to identify impact of circulation on responsiveness
food grain production Drought -24.72 (2.33) Flood 4.475 (0.65) Food grain production TABLE II SHOCKS AND RESPONSES IN INDIA: 1958-1992 public food distribution public food distribution flood damage calamity relief expenditure calamity relief expenditure (1) (2) (3) (4) (5) (6) -0.027 (3.55) -3.510 (3.43) 6.207 (3.20) 0.009 (1.60) Flood damage 0.035 0.141 (0.79) (4.82) State effects YES YES YES YES YES YES Year effects YES YES YES YES YES YES Number of 460 512 524 480 507 523 observations Adjusted R 2 0.84 0.71 0.69 0.18 0.19 0.27
c Kumar Aniket
Table II Policy Response Systems: Public Food Distribution responds to shocks in food grain production and Calamity Relief expenditure responds to the flood damage Table III Increase in level of newspaper circulation is associated with increase in both public food distribution and calamity relief expenditure (controlling for political variable). Economic / Demographic factors have limited influence on government responsiveness c Kumar Aniket
Table IV Interaction term γ significant for both policy response systems Public action is more responsive to food production shock and calamity relief expenditure more responsive to flood related crop damage wherever other language newspaper circulations are higher. other language newspapers, i.e.,non-hindi and non-english language newspapers, better at highlighting the plight of the shock affect vulnerable voters and galvanizing the state governments
Table V Newspaper ownership structure correlated with newspaper circulation and can be used to instrument for newspaper circulation. Confirms Table IV s results. Table VI Interact political variable with food production and flood damage shock variables. Greater responsiveness associated with - greater electoral turnout - more intense political competition Political Effects more pronounced for food distribution than calamity relief. c Kumar Aniket
Examine how political accountability can be improved in low income countries where populations may rely on state action for survival With frequent droughts and floods in India, what determines the state government s activism and responsiveness via increase public food distribution and calamity relief expenditures? shared vulnerability - common interest in being protected against shocks + mass media allows minority to affect policy choices of politicians Paper provides robust empirical test of these ideas and points to the centrality of access to information for citizens in a democracy
CONCLUSIONS Linkages between the press and democracy in preventing famines has long been recognised India has not had a famine since independence, and given the nature of Indian politics and society, it is not likely that India can have a famine even in years of great food problems. The government cannot afford to fail to take prompt action when large-scale starvation threatens. Newspapers play an important part in this, in making the facts known and forcing the challenge to be faced. Sen (1984)
Interesting question: are both free information flows and democracy important in making politicians responsive to the needs of citizens? Besley Burgess (2002) argues that government responsiveness affected by Mass media newspaper circulations - other language newspapers that are more likely to highlight the plight of the local shock affected vulnerable voters political institutions and factors turnout political competition timing of elections Formal institutions of political competition, i.e., such as open elections, are not sufficient to deliver a responsive government c Kumar Aniket
Information is power... Rousseau, Smith, Hobbes, Locke, Madison, Jefferson and Mill requisite government quality requires the development of key institutions press freedom is essential for citizens to make intelligent and well-grounded decisions about public affairs