Jesse M. Shapiro

Media Bias and Reputation

A Bayesian consumer who is uncertain about the quality of an information source will infer that the source is of higher quality when its reports conform to the consumer’s prior expectations. We use this fact to build a model of media bias in which firms slant their reports toward the prior beliefs of their customers in order to build a reputation for quality. Bias emerges in our model even though it can make all market participants worse off. The model predicts that bias will be less severe when consumers receive independent evidence on the true state of the world and that competition between independently owned news outlets can reduce bias. We present a variety of empirical evidence consistent with these predictions.

Who is “Behavioral”? Cognitive Ability and Anomalous Preferences

In this paper, we ask whether variation in preference anomalies is related to variation in cognitive ability. Evidence from a new laboratory study of Chilean high school students shows that small-stakes risk aversion and short-run discounting are less common among those with higher standardized test scores, although anomalies persist even among the highest-scoring individuals. The relationship with test scores does not appear to result from differences in parental education or wealth. A laboratory experiment shows that reducing cognitive resources using a cognitive load manipulation tends to exacerbate small-stakes risk aversion, with similar but statistically weaker effects on short-run impatience. Explicit reasoning about choice seems to reduce the prevalence of these anomalies, especially among the less skilled. Survey evidence suggests that the role of cognitive ability may extend to adult behaviors that are related to small-stakes risk preference and short-run time preference.

Ideological Segregation Online and Offline

We use individual and aggregate data to ask how the Internet is changing the ideological segregation of the American electorate. Focusing on online news consumption, offline news consumption, and face-to-face social interactions, we define ideological segregation in each domain using standard indices from the literature on racial segregation. We find that ideological segregation of online news consumption is low in absolute terms, higher than the segregation of most offline news consumption, and significantly lower than the segregation of face-to-face interactions with neighbors, co-workers, or family members. We find no evidence that the Internet is becoming more segregated over time.

Is there a Daily Discount Rate? Evidence from the Food Stamp Nutrition Cycle

Quasi-hyperbolic discounting predicts impatience over short-run tradeoffs. I present a direct non-laboratory test of this implication using data on the nutritional intake of food stamp recipients. Caloric intake declines by 10 to 15 percent over the food stamp month, implying a significant preference for immediate consumption. These findings constitute a rejection of the permanent income hypothesis and are extremely difficult to reconcile with exponential discounting. The data support an explanation based on time preference and reject several alternative explanations, including highly elastic intertemporal substitution. I explore implications for the optimal timing of transfer payments under alternative assumptions about preferences.

Urban Growth in the 1990s: Is City Living Back?

The 1990s were an unusually good decade for the largest American cities and, in particular, for the cities of the Midwest. However, fundamentally urban growth in the 1990s looked extremely similar to urban growth during prior post–war decades. The growth of cities was determined by three main trends: (1) cities with strong human capital bases grew faster than cities without skills, (2) people moved to warmer, drier places, and (3) cities built around the automobile replaced cities that rely on public transportation. Although the negative impact of population density diminished slightly in the 1990s, there is no real evidence for a return to large, dense cities.

Media, Education, and Anti-Americanism in the Muslim World

Recent surveys in the United States and the Muslim world show widespread misinformation about the events of September 11, 2001. Using data from 9 predominantly Muslim countries, we study how such beliefs depend on exposure to news media and levels of education. Standard economic theory would predict that increased access to information should cause beliefs to converge. More recent models of biased belief formation suggest that this result might hinge critically on who is providing the information. Consistent with the latter, we find that overall intensity of media use and level of education have at best a weak correlation with beliefs, while particular information sources have strong and divergent effects. Compared to those with little media exposure or schooling, individuals watching Arab news channels or educated in schools with little Western influence are less likely to agree that the September 11 attacks were carried out by Arab terrorists. Those exposed to media or education from Western sources are more likely to agree. Belief that the attacks were morally justified and general attitudes toward the US are also strongly correlated with source of information. These findings survive controls for demographic characteristics and are robust to identifying media effects using cross-country variation in language.

WHO IS ‘BEHAVIORAL’? COGNITIVE ABILITY AND ANOMALOUS PREFERENCES: Who is ‘Behavioral’?

In this paper, we ask whether variation in preference anomalies is related to variation in cognitive ability. Evidence from a new laboratory study of Chilean high-school students with similar schooling backgrounds shows that small-stakes risk aversion and short-run discounting are less common among those with higher standardized test scores. The relationship with test scores survives controls for parental education and wealth. We find some evidence that elementary-school GPA is predictive of preferences measured at the end of high school. Two laboratory interventions provide suggestive evidence of a possible causal impact of cognitive resources on expressed preferences. (JEL: J24, D14, C91).

Cities and Warfare: The Impact of Terrorism on Urban Form

Abstract What impact will terrorism have on Americas cities? Historically, large-scale violence has impacted cities in three ways: First, concentrations of people have an advantage in defending themselves from attackers, making cities more appealing in times of violence. Second, cities often make attractive targets for violence, which creates an incentive for people to disperse. Third, since warfare and terrorism often specifically target means of transportation, violence can increase the effective cost of transportation, which will usually increase the demand for density. Evidence on war and cities in the 20th century suggests that the effect of wars on urban form can be large (for example, Berlin in World War II), but more commonly neither terrorism nor wars have significantly altered urban form. As such, across America the effect of terrorism on cities is likely to be small. The only exception to this is downtown New York which, absent large-scale subsidies, will probably not be fully rebuilt. Furthermore, such subsidies make little sense to us.

Smart Cities: Explaining the Relationship between City Growth and Human Capital

From 1940 to 1990, a 10 percent increase in a metrpolitan area’s concentration of college-educated residents was associated with a .6 percent increase in subsequent employment growth. Using data on growth in wages and house values, I attempt to distinguish between explanations for this correlation based on local productivity growth, and explanations based on growth in local consumption amenities. Calibration of a city growth model suggests that roughly two-thirds of the growth effect of human capital is due to enhanced productivity growth, the rest being caused by growth in the quality of life. This contrasts with the standard argument that human capital generates growth in urban areas solely through local knowledge spillovers.

MEDIA BIAS IN THE MARKETPLACE: THEORY

We review the theoretical literature on market determinants of media bias. We present a theoretical framework that organizes many key themes in the literature, and discuss substantive lessons.