An aspiring financial journalist...in the age of fake news?

Ask anyone who’s not a journalist for their thoughts on media, and they’ll point out two things: 1) Print media is dying, and 2) Digital media is a minefield of fake news and propaganda. And to a large extent, these points are true. Current political news includes massive informational “dumps”, for lack of a better word, from a range of sources, leaving readers to discern facts and form opinions. Stock market news, on the other hand, faces the opposite problem. With major players MarketWatch and Bloomberg providing stock updates by the minute, who needs a detailed financial analysis? The genuine facts are easily available from the big players, and the opinions run the risk of being propaganda. So where exactly does “financial journalism” fall? And why do we even need it? 

According to Italian economist, Vilfredo Pareto:

“The foundation of political economy and, in general, of every social science, is evidently psychology. A day may come when we shall be able to deduce the laws of social science from the principles of psychology.”

And this is perhaps the best answer to why the world needs financial journalists. We serve to explain the psychology behind the data that makes up the political economy; and perhaps if we get a bit ahead of ourselves, to predict the future economy. Now a pertinent question one might ask would be: why doesn’t a basic understanding of Economics remove the need for financial journalism? Adam Smith proclaimed in the 18th century that the supply and demand forces in a laissez faire market would allow it to reach equilibrium without government intervention- and this still holds true today. The difference is that the modern economy often operates against these core assumptions in a variety of areas: trade, taxation, public policy to name a few. 

A better understanding of this is provided by famous economist Richard Thaler in his book, Misbehaving. Thaler delves into the idea of Econs, or hypothetical individuals who operate according to existing psychological and economic theory. These Econs, he furthers, are drastically different from how we operate in real life: for instance, an Econ would value a gain in wealth today the same as a gain in value 2 months later. Humans, however, would much rather gain the money today. He then spends the remainder of the book explaining areas where Econs differ from us: ranging from football to the poker table. Thus, the need for financial journalists stems from the same reason that Thaler wrote Misbehaving. If humans operated like Econs, Thaler wouldn’t have a book and we wouldn’t have the entire industry. 

However, this still doesn’t resolve the issue we started with: dying print media and growing fake news. Is there any merit to being a journalist in the first place? These factors, I argue, are precisely what make current times the best for journalism. With constant departures from the “normal” in economics and politics, there is no shortage of fodder to analyse; and with the volume of fabricated news, it is more important than ever before to provide the public with accurate accounts. This power of journalism was perhaps best captured by Kovach and Rosenstiel in The Elements of Journalism:

“The primary purpose of journalism is to provide citizens with the information they need to be free and self-governing.”

While the text goes onto explain specific elements like truth and relevance, the fact remains that journalism will continue to persist, despite fake media. As for the importance of business reporting, we go back to Pareto: until we can deduce the laws of social science from psychology, financial journalism is here to stay.