Media and Policy - University of Cambridgepeople.ds.cam.ac.uk/ka323/teaching/devt2011/Slides-Lec4.pdf · Prologue Djankov et al. (2002) Reinikka & Svensson (2004) Besley & Burgess

Prologue Djankov et al. (2002) Reinikka & Svensson (2004) Besley & Burgess (2002) Epilogue

Media and Policy

EC307 ECONOMIC DEVELOPMENT

Dr. Kumar AniketUniversity of Cambridge & LSE Summer School

Lecture 4created on July 4, 2011

c!Kumar Aniket


READINGS

Tables and figures in this lecture are taken from:

Besley, T. and Burgess, R. (2001). Political agency, governmentresponsiveness and the role of the media. European EconomicReview. 45(4-6):629–640.

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 ofpublic funds. World Bank, Mimeo.

! Class based on Besley, T. and Burgess, R. (2002). The politicaleconomy of government responsiveness: Theory and evidencefrom India. Quarterly Journal of Economics, 117(4):1415–1451.

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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:

- Djankov et al. cross-country data on media ownership

- state ownership of media associated with poorer qualitygovernments and worst outcomes

- a cross-section analysis (97 countries)

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MEDIA OWNERSHIP PATTERN

Paper finds that 2 dominant forms in which media tends of beorganised 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

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HOW SHOULD MEDIA BE ORGANISED?

Public Choice Theory: Government (bearaucrats & politicians) maximisetheir 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 consumerand prevents capture by interest groups

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HOW SHOULD MEDIA BE ORGANISED?

Public Choice Theory: Government (bearaucrats & politicians) maximisetheir 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 andservices

Competition

• Unbiased accurate information on average

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PREDICTIONS OF THE TWO THEORIES

Public Interest Theory’s prediction: Governments should have higherlevels of media ownership

Consequences of government ownership of media

1. Greater freedom of press2. more economic and political freedom3. better social outcomes

Public Choice theory predicts the opposite: Governments should notown or control the media

Consequences of government ownership of media

1. less freedom of press2. less economic and political freedom3. worse social outcomes

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Figure 4.—Newspaper and TV ownership

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Figure 2.—TVN (Norway)

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TABLE 6Media Freedom ( Countries)N p 97

Variable

State Ownership

Gross NationalProduct per

Capita

State-OwnedEnterprise

Index Autocracy

PrimarySchool

Enrollment Constant R2Press,by Share

Television,by Share Radio

Journalists jailed, RSFa .0865(.0562)

!.0013(.0010)

!.0018(.0048)

!.0531(.0575)

.0004(.0009)

.0581(.0979)

.1678

.0272(.0428)

!.0022**(.0008)

!.0026(.0049)

!.0952(.0652)

.0002(.0009)

.1272"

(.0776).1362

!.0141(.0224)

!.0021*(.0009)

!.0040(.0050)

!.1162"

(.0642).0001(.0008)

.1890**(.0683)

.1348

Media outlets closed .0674(.0543)

!.0019(.0018)

.0033(.0060)

!.0488(.0550)

.0012**(.0004)

!.0418(.0658)

.1040

!.0524(.0738)

!.0022"

(.0013).0006(.0048)

!.1247*(.0604)

.0009*(.0004)

.1180(.0937)

.0947

!.0276(.0425)

!.0025(.0017)

.0008(.0049)

!.1039*(.0462)

.0009*(.0003)

.0868(.0593)

.0899

Journalists jailed, CPJb .4539**(.1592)

!.0067"

(.0038)!.0017(.0179)

.1121(.2243)

.0030(.0025)

!.2107(.3250)

.2106

.4069*(.1604)

!.0125**(.0041)

.0016(.0182)

.0455(.2249)

.0028(.0026)

!.2270(.3506)

.1822

.1343"

(.0802)!.0102**(.0039)

!.0037(.0179)

!.1441(.2008)

.0022(.0029)

.1423(.3318)

.1324

Internet freedom !.4231**(.1546)

!.0011(.0022)

.0032(.0121)

.3693"

(.1952)!.0020(.0024)

.8550**(.2950)

.4321

!.1297(.1184)

.0031(.0029)

.0069(.0123)

.5832**(.1884)

!.0010(.0024)

.5052"

(.2835).3347

!.0208(.0443)

.0025(.0025)

.0096(.0130)

.6516**(.1558)

!.0008(.0025)

.3522(.2700)

.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 grossnational 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 Frontieres.b CPJ p Committee to Protect Journalists." Significant at the 10% level.* Significant at the 5% level.** Significant at the 1% level.

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TABLE 7Political and Economic Freedom

Variable

State OwnershipGross National

Product perCapita

State-OwnedEnterprise

Index Autocracy

PrimarySchool

Enrollment Constant R2 NPress,by Share

Television,by Share Radio

Political rights !.1804**(.0612)

.0107**(.0020)

!.0016(.0071)

.7819**(.0792)

.0005(.0007)

!.1039(.1122)

.8276 97

!.1161"

(.0680).0128**(.0020)

!.0016(.0078)

.8351**(.0701)

.0007(.0008)

!.1630(.1222)

.8144 97

.0042(.0419)

.0123**(.0020)

.0018(.0076)

.9045**(.0667)

.0011(.0009)

!.3366**(.1164)

.8072 97

Civil liberties !.1468**(.0529)

.0104**(.0018)

!.0006(.0063)

.5377**(.0756)

.0005(.0007)

.0653(.1084)

.7718 97

!.0671(.0660)

.0120**(.0017)

.0001(.0070)

.5969**(.0694)

.0007(.0007)

!.0220(.1189)

.7547 97

.0162(.0395)

.0117**(.0018)

.0028(.0069)

.6420**(.0598)

.0010(.0008)

!.1445(.1023)

.7514 97

Corruption .0801"

(.0451)!.0188**(.0019)

!.0096(.0070)

!.0804(.0500)

!.0006(.0008)

.8204**(.0903)

.7711 95

!.0236(.0491)

!.0194**(.0020)

!.0115(.0072)

!.1483**(.0442)

!.0009(.0009)

.9509**(.1048)

.7642 95

.0002(.0382)

!.0195**(.0019)

!.0108(.0070)

!.1343**(.0418)

!.0008(.0009)

.9169**(.1060)

.7637 95

Security of property !.2716**(.0714)

.0115**(.0018)

.0316**(.0078)

!.1239(.1047)

!.0018*(.0009)

.7615**(.1476)

.6697 91

!.0243(.0613)

.0138**(.0018)

.0350**(.0082)

.0324(.1228)

!.0009(.0008)

.4582**(.1534)

.5929 91

.0310(.0421)

.0137**(.0018)

.0373**(.0090)

.0588(.1093)

!.0007(.0009)

.3713(.1459)

.5941 91

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Risk of confiscation .2146**(.0788)

!.0064**(.0017)

!.0047(.0095)

.1140(.1037)

!.0056(.0017)

.6445**(.1896)

.5369 81

.1442"

(.0729)!.0090**(.0020)

!.0039(.0098)

.0818(.1156)

!.0058**(.0016)

.6774**(.1935)

.5037 81

.0488(.0377)

!.0081**(.0018)

!.0051(.0100)

!.0060(.1121)

!.0059**(.0018)

.8142**(.2044)

.4855 81

Quality of regulation !.5400**(.1856)

.0204**(.0046)

.0620**(.0178)

.5461(.2433)

.0007(.0025)

!.5779(.3528)

.6522 97

!.1120(.1652)

.0255**(.0048)

.0686**(.0197)

.8429**(.2628)

.0021(.0023)

!1.0931**(.3605)

.6088 97

!.0425(.1019)

.0249**(.0046)

.0698**(.0207)

.8932**(.2341)

.0022(.0023)

!1.1859**(.3212)

.6076 97

Number of listed firms !.0271(.0104)

.0010**(.0003)

!.0032(.0025)

.0063(.0136)

.0000(.0001)

.0258*(.0129)

.1653 97

!.0147(.0116)

.0013**(.0003)

!.0032(.0027)

.0159(.0142)

.0001(.0001)

.0130(.0137)

.1333 97

.0080(.0076)

.0013**(.0003)

!.0024(.0023)

.0274(.0193)

.0001(.0001)

!.0209(.0199)

.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. Wecontrol for gross national product per capita, the state-owned enterprise index, autocracy, and primary school enrollment. Table 1 describes all variables in detail. Robuststandard errors are shown in parentheses.

" Significant at the 10% level.* Significant at the 5% level.** Significant at the 1% level.

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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 primaryschools. 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 newsby trying to make the system of public funding more transparent

- Central government started publishing newspaper accounts ofmonthly transfers of funds to local district governments

The paper links the newspaper campaign to the (dramatic) reductionin leakage of funds

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CONCLUSIONS

Paper explores that problem in delivering education in places withweak institutional environments

Not explicit how information is actually used by parents, teachers etc.

We need to think more carefully about theories that link provision ofinformation to a lowering in leakage

Problem: All schools potentially exposed to the newspaper campaign.May be, it is not the information but how schools & communitiesreact to information that matters.

e.g. you could get same result just because schools nearer tonewspaper outlet are better connected & lobby harder to obtainthe missing education funds

In short, results consistent with a number of stories.

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Political Economy of Government Responsiveness

– Does media make the state more responsive to the needs of theelectorate?

! Role of information transmission in highlighting an issue andmaking it salient to voters

! Possibility that salience for a minority leads to public action

Model: How media development and democracy can createincentives for incumbent governments to respond to crises

Empirics: Media’s influence on Indian state government’sresponse to droughts & floods using panel data from 1958-92

" Suggests that media improves political accountability

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Government responsiveness is a key issue in low income countries wherepopulations 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 fooddistribution?

Analysis suggests that political participation & competitionimportant 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 inensuring that politicians respond to the citizen’s needs

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THEORETICAL FRAMEWORK

! The model links incumbent’s actions & re-election incentives bysupposing that voters use observations about incumbent effortas information about the incumbent’s underlying type.

! Incentives work best for opportunistic incumbents who respondwhen it is in their interest to do so.

By exerting effort, they distinguish themselves from thedead-beat incumbents who do not respond at all. And, crucially,they are more willing to do this when their actions are visible due tomedia.

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Incumbent wins if γ ·σ · s(e,m,β )! "# $

no. of vulnerable votes

+ (1# γ) ·v! "# $

no. of non-vulnerable votes

>1

2

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

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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

pe(e;m) > qe(e;m)

.

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EMPIRICS

Panel Data Regression of the form:

gst = αs +βt +δ sst + γ(zst)(sst)+φ zst +ust

gst – measure of government responsiveness (public fooddistribution, calamity relief expenditure)

αs – state fixed effects

βt – year fixed effects

sst – measure of shocks (proxy for proportion of vulnerable votersaffected by the shock)

zst – economic, political and media variables that may affect gst

φ – government activismi.e., redistribution in response to long term food imbalances

γ – government responsiveness to recent shock

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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

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TABLE II SHOCKS AND RESPONSES IN INDIA: 1958 - 1992

food grain production

public food distribution

public food distribution

flooddamage

calamity relief

expendi-ture

calamity relief

expendi-ture

(1) (2) (3) (4) (5) (6)

Drought -24.72(2.33)

-3.510(3.43)

Flood 4.475 (0.65)

6.207(3.20)

Food grain production

-0.027(3.55)

0.009(1.60)

Flood damage 0.035 (0.79)

0.141 (4.82)

State effects YES YES YES YES YES YES

Year effects YES YES YES YES YES YES

Number of observations

460 512 524 480 507 523

Adjusted R2 0.84 0.71 0.69 0.18 0.19 0.27

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Table II Policy Response Systems:

• Public Food Distribution responds to shocks in food grainproduction 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 reliefexpenditure (controlling for political variable).

• Economic / Demographic factors have limited influence ongovernment responsiveness

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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 cropdamage

wherever “other” language newspaper circulations are higher.

“other” language newspapers, i.e.,non-Hindi and non-Englishlanguage newspapers, better at highlighting the plight of the shockaffect vulnerable voters and galvanizing the state governments

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Table V Newspaper ownership structure correlated with newspapercirculation and can be used to instrument for newspapercirculation. Confirms Table IV’s results.

Table VI Interact political variable with food production and flooddamage shock variables.

• Greater responsiveness associated with

- greater electoral turnout- more intense political competition

• Political Effects more pronounced for food distribution thancalamity relief.

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Examine how political accountability can be improved in low incomecountries where populations may rely on state action for survival

With frequent droughts and floods in India, what determines thestate government’s activism and responsiveness via increase publicfood 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 thecentrality of access to information for citizens in a democracy

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CONCLUSIONS

Linkages between the press and democracy in preventing famineshas long been recognised

“India has not had a famine since independence, and given thenature of Indian politics and society, it is not likely that India canhave a famine even in years of great food problems. Thegovernment cannot afford to fail to take prompt action whenlarge-scale starvation threatens. Newspapers play an importantpart in this, in making the facts known and forcing the challengeto be faced.” Sen (1984)

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Interesting question: are both free information flows and democracyimportant in making politicians responsive to the needs of citizens?

Besley Burgess (2002) argues that government responsivenessaffected by

! Mass media• newspaper circulations

- “other” language newspapers that are more likely to highlight theplight 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 openelections, are not sufficient to deliver a responsive government

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“Information is power”

. . . Rousseau, Smith, Hobbes, Locke, Madison, Jefferson and Mill

! requisite government quality requires the development of keyinstitutions

press freedom is essential for citizens to make intelligent andwell-grounded decisions about public affairs

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Media and Policy - University of Cambridgepeople.ds.cam.ac.uk/ka323/teaching/devt2011/Slides-Lec4.pdf · Prologue Djankov et al. (2002) Reinikka & Svensson (2004) Besley & Burgess

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