Mediated uncertainty: The negative impact of uncertainty in economic news on consumer confidence

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Abstract

A growing body of research shows that uncertainty affects individual perceptions and preferences. However, we still know little about how uncertainty in news content affects public opinion formation. Building upon literature on the processing of uncertain information and prospect theory, we argue that uncertainty in the news lowers public expectations and fosters pessimism. A time-series analysis of national monthly consumer confidence data, economic indicators, and an automated content analysis of economic newspaper coverage between 1996 and 2012 confirms this expectation. The analysis shows that uncertainty in economic news decreases consumer confidence, after controlling for real economic developments and the tone of the news. The effect of uncertainty cannot be explained as an asymmetrical response to ambiguous information, since uncertainty in the news did not make negative information more salient. Finally, we discuss influences of the nature of reporting on uncertainty in the news.

Original languageEnglish
JournalPublic Opinion Quarterly
Volume81
Issue number1
Pages (from-to)111-130
ISSN1537-5331
DOIs
Publication statusPublished - 1. Mar 2017

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