The press thus plays an essential role in the battle for openness, but is at the same time a central part of the “conspiracy of secrecy.” The press must commit itself to working for openness. Expecting reporters to disclose their secret sources inside the government or not to seek out exclusive sources of information is unrealistic, but more reporting on the reporting process itself is needed to expose the dangers of this nefarious system, if not the key players.
Transparency in Government 43
A legal framework committed to openness and transparency—including right-to-know laws and ensuring diversified, competitive media—is essential, but insuffi-cient. Also essential are the information institutions, especially free, competitive, and critical media committed to ensuring that government is open and transparent, and as committed to disclosing their own limitations—the symbiotic relationships be-tween the members of their fraternity and the government that so often leads to distorted news coverage—as they are to disclosing the limitations of government.
References
Bentham, J. 1838-43. The Works of Jeremy Bentham, 11 vols. Published under the supervision of his executor, John Bowring. Edinburgh: W. Tait.
Bok, S. 1982. Secrets. New York: Pantheon.
Carpenter, T. G. 1995. The Captive Press: Foreign Policy Crises and the First Amendment. Washington, D.C.: Cato Institute.
Edlin, A., and J. E. Stiglitz. 1995. “Discouraging Rivals: Managerial Rent-Seeking and Economic Inefficiencies.” American Economic Review 85(5): 1301–12. Also published in 1997 as Working Paper no. 4145, National Bureau of Economic Research, Cambridge, Massachusetts.
Emerson, T. 1967. Toward a General Theory of the First Amendment. New York: Vintage Books.
———. 1970. The System of Freedom of Expression. New York: Vintage Books.
Grossman, S. 1981. “The Informational Role of Warranties and Private Disclosure about Product Quality.” Journal of Law and Economics 24(3): 461–84.
Halévy, E. 1972. The Growth of Philosophic Radicalism. London: Faber.
Hirschman, A. O. 1970. Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Cambridge, Massachusetts: Harvard University Press.
Madison, James. 1799. “The Virginia Report of 1799–1800, Touching the Alien and Sedition Laws.”
Reprinted in L. Levy, ed., 1966. Freedom of the Press from Zenger to Jefferson. Indianapolis: Bobbs-Merrill.
Mill, J. S. 1859. On Liberty. Reprinted in M. Cohen, ed., 1961. The Philosophy of John Stuart Mill.
New York: Modern Library.
———. 1861. Considerations of Representative Government. Reprinted in H. B. Acton, ed., 1972.
J. S. Mill: Utilitarianism, On Liberty and Considerations on Representative Government. London:
J. M. Dent.
Mueller, D., ed. 1997. Perspectives on Public Choice: A Handbook. Cambridge, U.K.: Cambridge University Press.
Padover, S., ed. 1953. The Complete Madison. New York: Harper.
Sen, A. 1980. “Famines.” World Development 8(9): 613–21.
Shleifer, A., and R. W. Vishny. 1989. “Management Entrenchment: The Case of Manager-Specific Investments.” Journal of Financial Economics 25(1): 123–39.
Soros, G. 2002. George Soros on Globalization. Public Affairs, LLC.
Stiglitz, J. E. 1975a. ”Incentives, Risk, and Information: Notes towards a Theory of Hierarchy.”
Bell Journal of Economics 6(2): 552–79.
———. 1975b. “Information and Economic Analysis.” In M. Parkin and A. R. Nobay, eds., Cur-rent Economic Problems. Cambridge, U.K.: Cambridge University Press.
_____. 1998. “The Private Uses of Public Interests: Incentives and Institutions.” Journal of Eco-nomic Perspectives 12(2): 3–22.
———. 1999. “On Liberty, the Right to Know, and Public Discourse: The Role of Transparency in Public Life.” Paper presented as the 1999 Oxford Amnesty Lecture, Oxford, U.K.
World Bank. 1998. Pollution Prevention and Abatement Handbook. Washington, D.C.
3
Mass Media and Political Accountability
Timothy Besley, Robin Burgess, and Andrea Prat
This chapter examines the media’s incentives to produce and disseminate informa-tion. Mass media can play a key role in enabling citizens to monitor the actions of incumbents and to use this information in their voting decisions. This can lead to government that is more accountable and responsive to its citizens’ needs. Despite the intuitive plausibility of this proposition, comparatively little work in the political economy literature scrutinizes the role and effectiveness of the media in fulfilling this function. A literature is emerging, however, that focuses attention on the impor-tance of the so-called fourth estate of government in the policy process.
This chapter discusses work on political agency problems with a focus on recent work by the authors. Besley and Burgess (2001, forthcoming) looked at the effects of the media on responsiveness to shocks in India, while Besley and Prat (2001) focused on the determinants and consequences of captured media using empirical evidence from cross-country data. At the heart of these papers is the idea that citizens have imperfect information about government actions, and that mass media can therefore enhance citizens’ abilities to scrutinize government actions.
Many reasons account for why governments are better informed than voters, and hence act on the basis of privileged information. Politicians know more about their competence than those who vote for them and have access to more policy advice and scenarios from a variety of sources. For example, if a bridge or a dam is being built, citizens can only ascertain whether the authorities have paid the proper attention to the relevant costs and benefits through media scrutiny. Similarly, when natural di-sasters strike, active mass media increase citizens’ ability to monitor their represen-tatives’ efforts to protect the vulnerable. This is particularly important in low-income countries, where citizens rely so strongly on the state for social protection. Suppose, for example, that in a region of a country containing 50 villages only 1 village is hit by a flood. Without the media only those directly affected can observe the government’s actions; however, mass media enable citizens in all 50 villages to observe whether
45
the government is responsive. This raises politicians’ incentives to respond, because citizens in the other 49 villages may use this information in their voting decisions.
For information generated by the media to be valuable, it needs to elicit an appro-priate collective response. This may be possible even in autocratic settings; however, it is clearly more likely to happen in a country with democratic institutions, such as free elections. In a democracy, citizens require information that they can use to select politicians who serve their needs and to punish those who do not, otherwise formal democracy has no bite.
While most countries have media of some description, their mere existence is no guarantee that they are an effective vehicle for critical scrutiny of state actions. This requires that media outlets have real information about such actions that they are willing to print or broadcast. This will depend on the extent to which the media are regulated, captured, or repressed, an outcome of a variety of government actions ranging from policy decisions that affect the regulation of entry and ownership of the media to explicit bribery or threats. Many countries, while formally democratic, have limited amounts of press freedom. In a sample of 151 countries for which both a press freedom ranking from Freedom House is available and that have held elections in the past five years, 36 receive one of the bottom two (on a scale of six) press free-dom scores and only 59 are in the highest two categories. The “democracies” with low press freedom scores also tend to be low-income countries.
How the government treats the media industry affects the development of news media and the quantity and quality of news generated. The raw data suggest the existence of huge variations in access to the media across the world. Data from the World Bank (1997) show a variation in circulation between 0.008 daily newspaper circulation per 1,000 population in St. Vincent and the Grenadines to 792 per 1,000 in Hong Kong, China. Similarly broad variations are apparent in television ownership, which according to the same data source ranges from 0.1 per 1,000 population in Rwanda to 850 per 1,000 in the United States. Not surprisingly, strong links exist between media development and other development indicators such as income per capita and literacy. After controlling for income per capita and regional dummy vari-ables, the evidence also indicates that newspaper circulation and television owner-ship are lower in countries that have a larger fraction of state-owned media (Djankov and others forthcoming).
A strongly positive correlation is apparent between media penetration and Free-dom House measures of press freeFree-dom. Media penetration seems also to go hand in glove with indexes of formal and real democracy. Using data from the Polity IV database (see http://weber.ucsd.edu/~kgledits/Polity.html), countries that are rated as more democratic have higher levels of news media penetration as measured by newspaper circulation and television ownership. Of course, the direction of causa-tion is unclear. A similar positive correlacausa-tion is found between media penetracausa-tion
Mass Media and Political Accountability 47
and the weaker formal notion of democracy measured by whether a country has held an election in the past five years.
What these raw correlations indicate is that significant costs may be associated with underdeveloped media. Moreover, underdevelopment of the media is often the result of governments’ decisions to insulate themselves from scrutiny and criticism.
Frequently this takes the form of government ownership, barriers to entry by private media companies, and antidefamation laws. While this may be in the interests of government officials, how it serves the public good is less clear. Deregulation of the media therefore stands out as a powerful policy lever that could be used to promote accountability in the developing world. The challenge is how to implement such deregulation in the face of government opposition.
Intellectual Framework
This section lays out the political agency framework that we view as a useful orga-nizing device for discussing the role of the media in democratic settings.
Political Agency Problems
A good framework for thinking about the role of the media is one in which citizens are imperfectly informed about the government’s actions and the track records of their leaders. To the extent that we believe that politicians may behave opportunisti-cally and serve their own private agendas ahead of those of the public at large, then politics is a kind of principal-agent problem. The principals are the citizens of the polity who finance government activities through taxes and are subject to various regulations, and the agents are the elected officials and bureaucrats who determine policy outcomes.1
A couple of features of political agency distinguish it from other agency relation-ships. First, the incentive schemes on offer are typically crude. For example, with politicians, except for cases of gross malfeasance, the only sanction typically avail-able is not to re-elect them. Monetary or other more nuanced incentive contracts are almost never observed. This has the consequence that incentives are mostly implicit, with politicians having to guess what the voters would like them to do rather than the latter posting performance criteria in advance. Even in the case of lobbying, a complete contract that specifies the details of what the principals (the lobbyists) de-sire is hard to imagine.
1. This approach has a long tradition in both political science and economics, beginning with Barro (1973) and Ferejon (1986). For recent reviews see, for example, Przeworski, Stokes, and Manin (1999) and Persson and Tabellini (2000, chapter 4).
The second distinctive feature is the multiplicity of principals. There are many citizens and other actors, such as corporations, that differ in countless ways. There-fore even if the incentives could be made explicit, for the principals to agree on the incentives that they will subject their agents to might be extremely difficult. Thus we could easily find principals with diametrically opposed interests wishing to pull the actions of the agents in different directions.
Information availability is at the heart of this theoretical view of government and politics. When the principals try to influence policy either via the ballot box or by lobbying, then they do so with limited information about the agents whom they are lobbying. Two types of problems arise: problems of hidden action (moral hazard), which occur when an agent has the discretion to make or take a bribe unbeknown to the citizens, and problems of hidden type (adverse selection), which occur when the agent’s motivations and/or competence are unknown. Ideally, effective incentives would punish incumbent politicians for bribe taking and/or incompetence, but if such behavior can-not be widely observed, then implementing such incentives is difficult.2
Private information gathering exercises by the principals are unlikely to provide sufficient information. This insight is at least as old as Downs (1957), who argued that voters would be “rationally ignorant” about politics, because as only one person out of a mass of voters, they have significant costs of being informed and negligible benefits.
This rational ignorance comes on top of the usual free-riding problem in actual voting, when a single voter may not find that the benefits of voting exceed the costs.
This might suggest great pessimism about the ability to find solutions to political agency problems; however, there are at least a few reasons to be more optimistic.
First, becoming informed about policy can result in significant private gains. Con-sider the case of old-age pensions. Any rational individuals planning for their retire-ment would realize significant private benefits from understanding the evolving public policy debate in this area. Second, the power of forces such as civic duty may make private benefits a poor guide to what happens in practice. Third, the mass media can be a powerful source of information provided to citizens at low cost. By being bundled with other information such as sports or entertainment news, many people may re-gard the acquisition of information not as a chore, but as a pleasure, thus raising the general level of awareness about policy and public affairs. This, at least, is the rosy-eyed view. Here we will use the framework of political agency to give a tighter speci-fication of the issues. We suggest that discussions of the effectiveness of the media
2. Besley and Case (1995) suggested that evidence supports the empirical significance of political agency models applied to U.S. governors, some of whom periodically face a term limit that bars them from running for office again. Incentives for governors to acquire reputations vary at such points: those with re-election incentives have stronger incentives than those with-out. Besley and Case found distinct policy differences between governors in their initial terms and governors who had reached their term limits.
Mass Media and Political Accountability 49
can be decomposed into two parts: (a) the forces that enable free and independent media to induce governments to better serve the public interest, and (b) the forces that lead the government to intervene successfully to silence the media.
The Media and Agency
Noncaptured media can affect political outcomes through three routes: sorting, dis-cipline, and policy salience.
Sorting refers to the process by which politicians are selected to hold office. Poli-ticians’ motivation is a potentially important issue for citizens. Some politicians, al-beit rarely, enjoy an almost saintly status, such as Gandhi and Nelson Mandela, while others are reviled. Typically their reputations are somewhere in between these ex-tremes; however, the kind of information the media provide can be important to voters who are deciding who to put in charge. This includes information about can-didates’ previous track records. Their actions while in office may also be an impor-tant source of information about their underlying motivation or competence. By printing news stories that responsibly cast light on this, the media can be a powerful force. To the extent that sorting is effective, ex post incentives are less necessary.
The role of the media in achieving discipline is most relevant in situations of hidden action. Suppose that a politician is thinking of taking or giving a bribe and that the probability that this will become public depends on the media’s efficacy in both discovering it and broadcasting it widely. The greater the media’s efficacy, the higher the marginal cost of the action, possibly deterring the individual from taking or giving the bribe. Thus we would expect media development to be negatively cor-related with such actions, leading to better incumbent discipline.
The media can also affect which issues are salient to voters. Besley and Burgess (forthcoming) consider the case of a vulnerable population in a developing country subject to shocks such as droughts and floods. Such populations depend on state action to mitigate the impact of these shocks, but need political clout to get their interests on the political agenda. One way to achieve this is for politicians to find it worthwhile to develop reputations for being responsive to shocks. This requires that these groups are informed about politicians’ actions and if they are informed, that the issue is salient among the many other characteristics of politicians that they care about. Assuming that the government’s responsiveness to droughts or floods is a significant enough issue to these citizens, then more information enhances the sa-lience of this issue at the ballot box, and thereby creates incentives for politicians to build reputations for being responsive. Mass media can thus play a central role in enhancing responsiveness by providing information that citizens can use when de-ciding whom to vote for.
More generally, by publicizing politicians’ stances on particular issues the media can change the structure of salient issues in elections. This may mean that the media
wield considerable influence. In some countries this can be less than benign, depend-ing on the motives of newspaper owners, for example, news stories can publicize events that enhance the salience of ethnic tensions leading to the victimization of particular ethnic groups.
All three of these effects rely on the media providing reliable information. The quality of the news offered to citizens depends on a number of factors. First, the transparency of the political system is important. In countries without traditions of free information flows, information will tend to be hard to obtain. The extent to which the media will print more speculative news will also depend on the legal environ-ment in which the news media operate. For example, the United States gives public figures less access to libel law and therefore makes it easier for the news media to print stories without fear of libel suits. This contrasts with the United Kingdom, where libel laws make publishing speculative news stories more difficult. Second, the methods and traditions of investigative journalism also affect news quality. This may depend on journalists’ training and the extent to which news editors reward investigative activity. It may also rest on some perception of citizens’ keenness to be informed, and hence the commercial value of breaking important news stories.
Media Capture
As we have just argued, to keep government accountable to the electorate a country needs effective media. This section looks at one of the main obstacles to media effec-tiveness: the possibility of political capture.
What motivates the media? First, they want to reach a large audience. This is true both for newspapers, because sale and advertising revenues are linked to circulation, and for television stations because of advertising and, where applicable, cable fees.
Competition for audience interest pushes the media to look for interesting news and to establish a reputation for reliability.
While the desire to increase market share is common to most industries, a second motivation derives from the media’s special role as political monitors. Any time the media monitor someone, he or she may be tempted to ingratiate or threaten the monitor to get more favorable coverage. In the case of the government and the media this takes a variety of forms. Some are simple, like cash bribes offered to individual journalists, violent threats, or censorship. Some are more subtle and typically not illegal. The government can pass a regulation that benefits the ultimate owner of a particular media outlet. For instance, if a newspaper is owned by an industrial con-glomerate that also owns an automobile manufacturing company, beneficial regula-tion might take the form of a tariff on imported automobiles.
To ascertain which of the two motivations are likely to prevail, Besley and Prat (2001) built a simple model of media capture that includes three classes of players: voters, politicians, and the media. Voters are rational and, for simplicity, have homogeneous
Mass Media and Political Accountability 51
preferences. Their problem is that they cannot monitor their politicians directly. All the information they receive comes from the media.
The political side of the model is represented by a standard two-period account-ability problem. In the first period a politician (the incumbent) is exogenously put in power. The type of incumbent (good or bad) is not directly observable. At the end of the first period an election is held in which voters can re-elect the incumbent or replace him or her with a challenger of random type. In the second period the candi-date who wins the election is in power.
The media industry is made up of n identical outlets. With some probability they receive verifiable news on the type of politician, which they can report to the public.
(For simplicity the model assumes that all members of the public are either informed or uninformed.) A media outlet cannot fabricate news and an outlet that reports informative news has a larger audience than one that reports no news. Moreover, the audience share of an outlet that reports news decreases the greater the number of other outlets that report news. The best case for an outlet is to be the only one to break news.
The model also assumes that news can only be bad, that is, one may have verifi-able information that a politician is bad, but not that he or she is good. This assump-tion is not restrictive for our purposes, because the government would never want to suppress positive news. The important assumption is that news cannot be fabricated.
Allowing for fabrication while keeping the assumption that voters are rational would make the analysis extremely difficult. The credibility of media would depend on a complex signaling game.
The revenues of a media outlet have two components that correspond to the two motivations discussed earlier. The first is an increasing function of audience. The second is a transfer from the government, which should be interpreted loosely as favorable regulation. The cost to the politician of making a transfer of a given value to the outlet depends on transaction costs. This is because some forms of transfer may be illegal or politically costly, while others can be disguised as normal policymaking.
The timing of the game is as follows: (a) the media outlets receive or do not re-ceive verifiable information about the incumbent; (b) the incumbent knows what information the media received and makes them transfer offers; (c) each outlet chooses whether to accept or reject the offer; (d) the outlets that accept the offer suppress their information, while the ones that reject it report their information to voters; and (e) voters re-elect the incumbent or replace the incumbent with a challenger.
In searching for the equilibrium of this game, the main question is whether the incumbent finds that buying off the media industry is profitable or not. If an outlet thinks that all the other outlets are going to be quiet, then its incentive to reject the incumbent’s offer rises, because it would be the only one to break the news to voters and would gain a large audience. This means that in an equilibrium in which all