Wednesday, October 21, 2009

Why economists should not leave the externalities of journalism to other fields alone

Columbia Journalism professor Michael Schudson and former Washington Post executive editor Leonard Downie Jr. have an article out in the Financial Times, "American journalism needs public support". This article does involve addressing the monumental externalities in journalism, even though they don't use that economics term.

So there are some journalism academics working on the externalities of journalism and how we might address them, but even in journalism, not a lot. In addition to the economics, law, political science, and policy literature, I've also searched the journalism literature and found very little on this.

But even if this were an active area of research in journalism, would that be a reason for economists to ignore it? Would it be social utility, or GDP, optimizing for economists to say let's have only journalism academics and professionals work on this?

Think about it.

The answer is of course not.

This would be grossly inefficient. Economists have unique skills they could bring to the table for this very economics related issue that Journalism professors and practitioners don't have. Studying this well and coming up with effective solutions is tremendously aided by advanced knowledge and skills in economic cost-benefit analysis, externality theory, political economy, econometrics, incentive and game theory, and more.

Given the enormous costs of these externalities it would be extremely high return to have a branch of economics working on them, and hopefully in conjunction with other fields like journalism, law, and political science, as these fields clearly have unique things to bring to the table that are also important regarding this issue. One of the biggest sources of inefficiency in social science academia is that the reward/penalty system greatly discourages working with professors in different fields (or in groups larger than three, at least in econ and finance), but it still happens sometimes, and hopefully would here.

Another problem with leaving this issue to journalism is that journalism professors and practitioners will be taken a lot less seriously in recommending solutions. First, addressing this involves subsidizing the positive externalities of journalism with large sums of money. So when journalism professors and professionals ask for this it looks like they are just doing it for themselves, to get more money, not because it's an extremely high return social investment.

If economists, however, recommend spending large sums of money to subsidize journalisms' positive externalities, it's not self serving. Their motives aren't suspect. And if they say it's economically efficient, that it's a very high return investment, they are taken much more seriously than professionals in journalism, or any other field, as after all it's economics, the study of economic efficiency and growth.

And economics is, in fact, amongst other things, the study of economic efficiency and growth. So we should definitely not be extremely socially inefficient ourselves by ignoring the monumental inefficiencies from the externalities of journalism. But so far that's just about what we've done.

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