How Big is the Media Multiplier? Evidence from Dyadic News Data
Abstract: This paper uses novel data to show how the media amplifies the economic impact of newsworthy events – the media multiplier. Specifically, we combine monthly aggregated and anonymized card spending data from 114 card issuing countries in 5 destination countries (Turkey, Egypt, Tunisia, Israel and Morocco) with a large corpus of news coverage of violent events in these destinations. To define and quantify the media multiplier we estimate a model of how media coverage helps shape beliefs about risks. When a country is perceived as dangerous by all potential visitors, aggregate spending falls by 53 percent with more than half of this effect due to the media multiplier.