| Abstract: |
Using a new comprehensive survey of adults in large U.S. media markets we show
that minority and low-skill individuals, who are heavily exposed to shocks to
the local economy, typically have stronger preferences for and stronger ex-
posure to local news than high-skill and white individuals. At the same time,
these disadvantaged individuals have been negatively affected by the impact of
the digital revolution on news provision. In particular, high-skill and white
indi- viduals have more rapidly embraced online and social media while
low-skill and minority individuals still heavily rely on local television and
other traditional news providers. These differences in provider choices are
important because the digital revolution has reduced the quality of
traditional news providers while the quality and quantity of online and social
media have substantially in- creased. To gain additional insights into the
welfare consequence of the digital revolution and assess potential policy
interventions, we develop and estimate a model of news production and demand
for local news. Our model is based on a time-allocation, discrete
bundle-choice framework. Our findings suggest that the loss of the local
newspaper (television) reduces welfare on average by $923 ($1064) which is
well above the annual subscription costs in most markets. Finally, we study
policies that subsidize online or social media to offset the loss of the local
newspaper or television station. |