Financial news is of central importance for shaping how we see the economy and make investment and personal finance decisions. But it is not always unbiased. Various factors can influence the content we see…who owns the media outlet, advertisers, and the personal views of journalists. It’s crucial to spot these biases so we can make smarter choices based on the actual news and not biased spin on that news.
This entire subject of bias in the financial media has not been covered extensively. We are all familiar with the raging debate about bias in the political and social realm, but somehow, financial journalists are not subject to the same kind of scrutiny.
They should be.
Biases can show up in many ways, affecting how reliable and accurate the information is. For example, who owns the media outlet can have a big impact. If a large company or a person with certain interests owns the outlet, the news might favor their investments. This means good news about their interests can be highlighted, while bad news can be ignored or downplayed.
The financial media mostly depends on advertising to make money. Big advertisers might pressure outlets to write favorable stories about them or avoid negative ones. This can create a conflict where the need for advertising money could be at odds with journalistic integrity.
Journalists bring their own backgrounds and opinions to their reporting. Even though they’re supposed to be objective, their personal views can still influence what they write about. Political leanings, past experiences, and personal beliefs can all shape the content.
And in today’s digital age, getting clicks and views is highly competitive. This sometimes leads to sensationalism, where headlines and stories are crafted to grab attention, sometimes at the expense of accuracy. This can exaggerate events, create market panic, or unduly praise certain trends.
Bias in financial news can have wide-ranging effects on investors, policymakers, and the general public. Biased reporting can lead to bad investment decisions. For example, too much optimism from favorable coverage might lead to risky investments, while baseless pessimism could make people miss opportunities. Investors who don’t check multiple sources are especially at risk.
Sensational and biased news can contribute to market instability. Worrisome headlines or overly hopeful projections can animate herd behavior, where many investors follow trends based on media hype rather than solid analysis. This can create bubbles, crashes, and general market chaos.
Bias in financial media can erode trust in journalism and the financial industry. When people spot biases, they may become skeptical of the information, leading to a general distrust of source. This can have broader consequences for trust in institutions and experts.
Worse, you are often not aware of the bias. There is not, in my opinion, enough disclosure and transparency and so, you might not even realize that bias is at work. Here is a simple example;
MarketWatch is a website providing financial information, business news, analysis and stock market data. It offers many data and opinion services to investors and the industry. As a sister company to the Wall Street Journal (The WSJ I believe to be among the least biased sources) and as a subsidiary of Dow Jones, owned by News Corp which in turn owns Fox News, you could assume that MW is an unbiased source or perhaps, may even lean Right/Strong Right in its views.
Well, you have to square that with this:
On May 22, MW published an article, not labeled as an editorial piece:
A bit of opinion there (‘easy targets’…perhaps), “unprecedented cuts” probably quite true. OK. No journalist felony there. But it becomes quite clear that the author does not like this bill and takes ample opportunity for editorial comment. But then, a number of sources are quoted to give her views credibility. Such as:
“Under the bill, 14 million Americans may lose health coverage, and 3 million households may go without food assistance, according to Accountable.US a nonpartisan watchdog group.”
Well, who is Accountable. US? If you ask Microsoft Copilot, the AI output repeats the “nonpartisan” description. So, I did what people never do…I went to the source. Accountable US – Empowering Americans to demand change
So, the first thing you’ll find on the splash page is this:
“Taking on the Special Interests Obstructing Progress. Accountable produces hard-hitting research to hold special interests accountable and drive progressive change.”
I mean, it’s right there, right? Progressive. Go and take a look, you’ll find an activist Left organization. Most definitely not nonpartisan.
Now to confess, I didn’t look at all the other sources she quotes. Perhaps there is balance. But it doesn’t matter. This source is not what it was claimed to be. And so, I felt a bit, ummm, manipulated. And it doesn’t matter whether or not I agree with the sentiments expressed…my opinion doesn’t matter. What does matter is the bias that remained out of sight, not disclosed to the reader.
Now this happens everywhere, and over time, we’ll be covering other examples that directly affect your pocketbook, your investment decisions. But you get it, this needs open discussion.
For now, while it’s tough to eliminate bias, there are ways to reduce its impact.
Encouraging different owners and diverse voices in media can help balance perspectives and reduce vested interests’ influence. Media outlets should aim to include various backgrounds and sectors to provide a fuller picture of financial markets. Real Clear Markets is an excellent source for everything from Left to Right. Take your pick, they offer all of it. www.realclearmarkets.com
Media organizations can be more transparent by disclosing potential conflicts, ownership structures, and advertising relationships. This helps readers critically assess information and understand possible bias.
Teaching the public about media literacy, especially regarding financial news, can help people evaluate the information they consume. Knowing how to spot bias and check multiple sources can lead to better-informed decisions.
Promoting ethical journalism standards is key. Journalists should follow codes that emphasize objectivity, fairness, and accuracy. Media organizations can support this by fostering a culture of integrity and accountability.
Bias in financial media is a tough challenge due to the complex mix of ownership, advertising, and personal view. But by recognizing the types of bias and their impacts, we can become more discerning news consumers. Promoting transparency, diversity, media literacy, and ethical journalism can help mitigate bias and maintain the integrity of financial reporting.
And help us all make better decisions.
Read Previous Articles:
