This article studies the tripartite relationship between the economy, economic news, and public economic perceptions. Our analysis is twofold: We investigate the impact of the real economy on economic news in Dutch newspapers (2002-2015, N = 127,120); second, we analyze the impact of economic news on public economic perceptions. Our empirical approach builds on and contributes to the literature by making nuanced distinctions between (a) economic levels and changes (positive/negative), (b) volume and tone of coverage (positive/negative), and, most importantly, (c) people’s retrospective and prospective economic judgments. Our analyses show that the public is presented a version of economic reality that is skewed to the negative, which strongly affects people’s economic expectations but not evaluations. Extending media-dependency theory, these results demonstrate the necessity to both conceptually and empirically distinguish between people’s retrospective and prospective judgments.

The relationship between the state of the real economy and economic news coverage on the one hand, and people’s economic perceptions on the other is a topic that repeatedly received scholarly attention. Summarizing existing work, research demonstrates how economic journalism does not simply follow real-world economic developments (e.g., Goidel & Langley, 1995; Lamla & Lein, 2014; Soroka, Stecula, & Wlezien, 2015) but, instead, is characterized by a set of persistent biases. Another strand of studies shows how such economic coverage subsequently influences public opinion (e.g., De Boef & Kellstedt, 2004; Nadeau, Niemi, Fan, & Amato, 1999) thereby demonstrating the relevance of economic news as a research topic from both an academic and a societal point of view. The crisis of the financial sector (2007-2009), followed by the outburst of the Great Recession that lasted until 2010, catapulted the topic into the center of heated public debates, making its relevance tangible for a much broader public.

Extending and replicating existing work, this study investigates the dual role of economic news coverage (a) as a dependent variable of journalistic routines in covering the economy and (b) as a predictor of economic perceptions among the public. For that twofold purpose, we combine theoretical insights from journalism studies with the literature on media effects. Concretely, we contribute to the literature by distinguishing between citizens’ evaluations over the economic past and their expectations regarding the economic future.

Whereas previous research mostly investigated general perceptions of the economy, media-dependency theory would suggest that strongest effects occur for relatively uncertain situations (Ball-Rokeach & DeFleur, 1976). Using a unique longitudinal Dutch data set (2002-2015, N = 127,120) in which both concepts can be disentangled, we show how asymmetric responses to economic information play a different role in the formation of people’s retrospective judgments vis-à-vis their prospective ones. Whereas the former are only shaped by economic developments, expectations of the future are largely the result of negative economic news reports, which, as we show, are disproportionately provided by economic journalists. Our findings, thus, theoretically urge scholars to differentiate between media effects on perceptions regarding the past and the future. Combining an (automated) content analysis of Dutch news with longitudinal public opinion data and real-world statistics from a period witnessing strong economic growth as well as exceptional downturns, we have a unique possibility to investigate relationships that are of high theoretical relevance for scholars interested in journalistic processes (i.e., negativity bias) as well as in media effects (i.e., media dependency).

Assessing the Past and the Future: Economic Evaluations Versus Expectations Previous research mostly has investigated the impact of economic news using a general measure of economic sentiments, most often operationalized as consumer confidence (e.g., De Boef & Kellstedt, 2004; Hollanders & Vliegenthart, 2011; Svensson, Albæk, van Dalen, & de Vreese, 2016). However, consumer confidence is an aggregated concept consisting of several elements that all measure a specific sentiment. While partly replicating existing research (e.g., Soroka, 2006, 2015), the original contribution of this study is found in the disentanglement of different economic perceptions. Theory predicts that in the absence of alternative information citizens depend more on the media to shape their perceptions (Ball-Rokeach & DeFleur, 1976; Boomgaarden et al., 2011); hence, items tapping retrospective compared with prospective economic judgments will arguably not be affected uniformly. Consumer confidence relies on diverse indicators such as people’s evaluations of their own financial household situation, as well as their expectations regarding the national economy. We disentangle the concept on a different dimension and distinguish retrospective and prospective elements while focusing specifically on people’s perceptions of the national economy. This allows us to test whether news is most crucial to the way in which people assess the past or the future state of the economy. Perceptions of the national economy are particularly relevant as existing research shows that these are central to the formation of other attitudes, such as support for the incumbent president or government (e.g., MacKuen, Erikson, & Stimson, 1992; Nadeau et al., 1999). Theory posits that the impact of media messages is contingent upon the level of audience dependency on media information resources: The higher this dependency, the greater is the likelihood that media information will influence people’s cognitions, feelings, or behaviors (Ball-Rokeach & DeFleur, 1976). Regarding people’s evaluations of the national economy over the past year, people are influenced by firsthand experiences with consequences of national economic conditions. During the previous year, one might have lost his or her job, received a higher income, learned about the financial performance of the company he or she works for, or knows someone who has faced the consequences of certain economic developments. The media, therefore, potentially only serve as a complementary source of information, besides the information already gained from one’s direct environment. By contrast, such firsthand experiences and alternative sources of information are less available and therefore less likely to influence the formation of people’s expectations regarding future economic conditions. It is precisely in such a context that audiences are particularly sensitive to mediated messages because no social reality yet exists that can provide an adequate framework for understanding (see, for example, Ball-Rokeach & DeFleur, 1976; Loges & Ball-Rokeach, 1993): This makes people dependent on the media to shape their expectations. The news media play into this uncertainty as they are mostly future-oriented and tend to focus on (changes in) present and upcoming economic conditions rather than those of the past (Soroka et al., 2015). The well-documented impact of economic news on public opinion might, thus, be not so much about what has happened in the current or past economy but more about what is likely to happen next. Based on these considerations, from the perspective of both the public (media dependency) and the media (future-oriented), we expect the impact of economic news to be stronger for the formation of people’s expectations than for their evaluations of the past: Hypothesis 4: The effects for volume and tone as formulated in H2, H3a, and H3b are stronger for economic expectations for the future than for economic evaluations of the past. Following the above rationale, we do not expect the news media to be the only source of information, but also anticipate and control for a direct effect of the real economy on people’s economic perceptions. After all, citizens will be confronted with the state of the economy in both their personal and professional life, which may translate into their evaluations and expectations of the economy. Therefore, our fifth and last hypothesis is: Hypothesis 5: The real economy positively affects people’s economic perceptions, above and beyond the impact of the media.

Discussion When the economy does not perform well, and especially when it develops into a negative direction, the audience is confronted with an increasing volume in economic news coverage. When the economy instead does well (e.g., when it recovers or grows), the audience will see less of it in the media. This imbalance in coverage, subsequently, affects public perceptions of the economy. Demonstrating how the effect of the (a) real-world economy travels through (b) news coverage all the way to (c) public perceptions, we provide an elaborate view of how this triangle of relationships may shape citizens’ perceptions of the past and future economy, thereby bringing together different elements that were mostly studied in separation by previous research. The negativity bias revealed in news coverage is in line with earlier research pointing out an overemphasis on negative stories in economic reporting (e.g., Soroka, 2006, 2015). The preoccupation among journalists with negative economic conditions is in line with their role conception as watchdogs. Moreover, the fact that especially negative developments lead to increases in news reporting reaffirms the news value of negativity and newness (Harcup & O’Neill, 2001). Western economies generally are characterized by a stable growth necessary to uphold employment rates; negative developments or crises strongly deviate from this pattern, which justifies journalistic sensitivity toward this. From the perspective of the media as the fourth estate, the overawareness regarding negative developments might be considered desirable. Controlling government implies tracing wrongdoings and societal problems instead of focusing on achievements. In such a function, it may come as no surprise that the media produce more (negative) economic news when the economy goes down relative to periods of economic growth. Not only do journalists overreact to negative economic developments, citizens in their turn most strongly respond to economic information when the news is bad. Thereby, our findings provide robust evidence for what earlier research already suggested (e.g., Soroka, 2006): Negative news leads to more pessimism, whereas positive news does not have the equivalent countereffect. In addition to existing research, however, we distinguish between evaluations of the economic past and expectations for the economic future. Hence, findings show that the unequal impact of negative as compared with positive coverage only applies to the formation of prospective judgments. This is in contrast to evaluations of the past, which are predominantly based upon real—positive and negative—economic developments: Shops that have been closed or opened, salaries that have been lowered or raised; all such real-life experiences may shape the way in which people perceive economic conditions over the last year. When people judge their nation’s economic future, they become increasingly optimistic when the economy grows. This positive impact is countered by the negative effect of economic news, of which both the volume and the negative tone lead to pessimism. These results imply that the mechanisms driving the effects of the real economy and the news are substantially different for people’s retrospective evaluations compared with their prospective expectations. By approaching it from a different angle, we were able to provide additional evidence for media-dependency theory (Ball-Rokeach & DeFleur, 1976). Whereas previous research demonstrated, for example, that evaluations of the own economic situation are less affected by economic news than those of the national situation (Boomgaarden et al., 2011), we demonstrate how media effects are conditional on the time period that is evaluated. The explanation for our findings most likely would be the higher level of uncertainty people face when judging the economic future compared with the economic past, for which other sources of information are available (e.g., real-life experiences, interpersonal communication). The different impact of economic growth and decline demonstrates that judgments regarding the past are indeed shaped differently from judgments regarding the future. Altogether, the results illustrate the relevance and importance of treating economic evaluations and expectations as truly distinct concepts in media effect research. People’s sensitivity toward negative news when assessing the economic future combined with the tendency among journalists to report more frequently when the economy goes downward, leads to the conclusion that people’s economic expectations tend to be distorted in a negative manner, especially in times of economic distress. This is not without consequences as these economic expectations are not only found to be strong predictors of economic behavior, such as the willingness to spend (e.g., D’Acunto, Hoang, & Weber, 2015), but they also have a profound impact on political preferences, such as presidential approval ratings (e.g., MacKuen et al., 1992; Nadeau et al., 1999). Altogether, our findings provide insights into the functioning of economic journalism in modern democracies. A tension seems to exist between the fulfillment of the watchdog role and other essential media functions, such as informing the citizenry in a correct manner (Strömbäck, 2005). Given the well-documented human sensitivity toward negative information (Tversky & Kahneman, 1975), journalists face an important task in the provision of accurate news reports in which positive economic information receives equivalent attention as negative news. Because they are central to the formation of economic expectations with all consequences these may have, economic news reports should ideally be a reflection of real economic conditions, not only content-wise but also volume-wise. Inevitably, our study faces certain limitations. By employing data on the aggregate (i.e., national) level, we are able to investigate a long time period, but this also means that we cannot draw conclusions on individual-level behavior. More specifically, any individual-level variation that could explain the media effects more into detail is not taken into account. Goidel et al. (2010), for example, find that exposure to different types of news sources (i.e., national and local newspapers, national and local television news) influences the effect economic news has on people’s perceptions. Distinguishing between different medium types, while tracing the effect of economic news on people’s perceptions at the individual level, is a crucial avenue for future research. Panel survey data would generate complementary and more refined insights in the way and under which conditions people’s perceptions are shaped by economic news coverage although for a shorter time period. Second, a computer-based content analysis is not the most sensitive measure when it comes to detecting nuanced differences among and within media messages. Yet, it is still the most suitable method for the analysis of large amounts of longitudinal media data. A more detailed, in-depth analysis of economic media messages, and the way in which these messages relate to real economic developments and people’s economic perceptions, might complement our findings and would be interesting for future studies. Altogether, the current study offers important insights into the way in which journalists respond to real-world economic conditions and how their news reports, in turn, affect the economic perceptions of citizens, especially regarding their expectations for the future. The double negativity bias, found on the level of both the media and the public, raises pressing questions about the functioning of economic journalism in modern democracies.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article. Funding

The authors disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: Research conducted for this article was funded by a VIDI grant (project number: 016.145.369) from the Netherlands Organization for Scientific Research awarded to Prof. Rens Vliegenthart.

Notes 1.

Data from the Dutch Parliamentary Election Study (2012, latest data available) show that 54% of all respondents indicate that they read at least one newspaper on a daily basis. 2.

Complete list available upon request. 3.

Complete list available upon request. 4.

For reasons of space, we do not present the results of the additional analyses in detail here (vector autoregressive [VAR] and error-correction models [ECMs]) nor our analyses ruling out the issue of cointegration. However, these are available upon request. 5.

All additional analyses are available upon request.