How journalism shapes expectations

The media play an important part in shaping the economic expectations of individuals, companies, or policy makers. That’s why economists have put considerable effort in defining and measuring media narratives. In a recent contribution to “The Routledge Handbook of Economic Expectations in Historical Perspective” Prof. Müller, Professor for Economic Policy Journalism at TU Dortmund University, aims at conceptualizing the process of journalistic narrative production.

To be sure, economic narratives are only rarely spelt out explicitly in media content. Rather, news pieces contain insinuations of latent narratives that serve as points of orientation, both for journalists themselves and for their audiences. According to Müller’s account, media stories come into being by journalists referring to latent narratives prevalent in a public sphere at a given time. An excerpt:

Consider how journalists produce news stories. Media economic objectives call for reaching a maximum audience in a fast and cost‑efficient manner; long‑term objectives also include quality requirements, particularly factual correctness, in order to bolster trust and hence a media brand’s market value. To be a viable product, journalistic content needs to be true, convincing, and exciting. It also needs to be digestible, that is, not overly complex. Complexity, in turn, is reduced when new facts are linked to established narratives (catering to the news value of consonance).

News stories arise when events trigger news values, such as rising unemployment. Journalists select not only the issue but also a narrative to make sense of uncertain, newly released information. They consider causes, responsibilities, remedies, and likely outcomes, while weighing multiple competing narratives already present in public discourse – for example, blaming offshoring, weak demand, regulation, immigration, or new technologies. These narratives often reflect deeper ideological perspectives, which can make some explanations mutually exclusive.

Narratives gain further traction when prominent actors endorse them. Even if journalists doubt a claim, statements by ministers, central bankers, or influential investors make it newsworthy. Narratives also shape expectations by linking facts to future consequences. If, for instance, a Keynesian interpretation of rising unemployment dominates both media and authorities, audiences may expect lower inflation and looser monetary policy, demonstrating how narratives guide perceptions of economic developments and policy responses.