Econ Bloggers Gain Clout in Financial Crisis

Late last month Dean Starkman, a writer for the Columbia Journalism Review, penned a scathing piece titled “Ouryay Eatbay Just Ewblay Upyay.” The essay is addressed to members of the mainstream business press and proclaims dramatically in the opening paragraphs that their beat “just blew up.” Starkman wags his finger at economic reporters, chastising the business beat as a group for failing to warn us of the coming crisis before the rug was pulled out from under our feet.

“From a journalistic standpoint, what we are experiencing today is the equivalent of the city hall reporter arriving for work one day to find the mayor and city council being led out in handcuffs,” he wrote. “If the business press were, say, a nuclear industry reporter, this is having most of the reactors on your beat melting down to China. What to tell the boss?”

As mainstream reporters have struggled to cover the crisis, a group of bloggers focused on the economy has risen to prominence over the last few years, diving in-depth into complex economic issues in a way unseen in the sound-bite-driven mainstream media. In recent months, many of these econ bloggers have seen their web traffic double as people scramble to understand the crisis and how the government, with its monolithic bailout legislation, is going to fix it.

Mark Thoma, an economics professor at the University of Oregon, experienced similar frustrations with the business coverage after the 2004 presidential election. Specifically, he was dissatisfied with much of the rhetoric from the pundits opining on government economic policy.

“It was probably two issues in particular,” he told me in a phone interview recently. “There was the whole ‘tax cuts increase revenue’ idea that I think a lot of people were getting fooled by, and also I was a little disappointed with a lot of the discussions on Social Security and how it would affect solvency and those sorts of issues.”

It was in the midst of this frustration when he launched Economist’s View, a site that now sits among the most influential of econ blogs. Over the last few weeks, Thoma’s web traffic has risen from 10,000 readers a day to between 15,000 and 20,000. And like other econ bloggers I spoke to for this article, he said that many of those who visit his site every week include business reporters, government regulators, and investors — an indicator that influence is larger than his direct readership.

Thoma explained to me that his rise within the blogosphere hinged almost entirely on maintaining credibility, so much so that for the first few years he was almost obsessive in checking his data before publishing it.

“When I came in I did not have the credibility that someone from Berkeley or Harvard would have simply because they show up on the scene, so I was really really careful whenever I wrote anything about economics,” he said. “I would stress to get it right and do some extra reading and made sure I didn’t become idiot of the day on Brad Delong’s blog [another influential econ blogger]. One hit like that and I was done, and people would say, ‘This guy doesn’t know what he’s talking about.’ So I was extremely careful to make sure I did it right for a couple years.”

Going Beyond He-Said-She-Said

I asked Thoma to compare the coverage on the more influential econ blogs to that found in mainstream press like the Wall Street Journal or CNBC. Are the econ bloggers able to better explain and analyze the often-complex factors that have led to the current crisis?

“I’m in academics,” he replied. “On the academics side, you don’t ever diagnose the patient. It’s all theoretical, and what I’m doing now, especially with the financial crisis, is like having a patient show up at the doctor’s office and say, ‘I’ve got these symptoms, what’s wrong with me?’ And the doctor sticks him. That’s a completely different use of economics — a real time analysis — that I haven’t seen before.”

Bill Conerly

Dr. Bill Conerly, an economic consultant since 1996, told me that econ bloggers tend to go beyond the he-said-she-said level of reporting on the economy, while a reporter simply quotes a few experts with opposing views.

“You get a diversity of viewpoints, more so than you get with the press,” he said. “With a typical journalist’s story, you take any idea, you find one guy who says it’s a good idea, one guy who says it’s a crazy idea. It’s just quotes that aren’t terribly useful. But what I see in the blogs is one guy trying to take things in one direction, and he’s pulling data to support that, and somebody else with a different viewpoint is trying to get the data to support his point. And what you get is a much richer dialog going on there. There have been times when I’ve thought, ‘That idiot, if he’d just look at the data.’ And then I start actually pulling the data, and I say, ‘Well gee, I guess he’s not such an idiot after all.’”

Conerly launched his econ blog, Businomics, in March 2006. Perhaps the most noticeable feature on the site is its fluent use of colorful charts; Conerly uses them to help explain the data that he discusses on the blog.

“I almost always do the charts myself,” he said. “I’m a visual learner, and I like to see a picture. It’s kind of the way I practice when I create a newsletter, an e-zine that goes out to my 1,600 closest friends. It’s simply three pages of handwritten charts with comments on it. People love that. I do a lot of speaking, and rarely will I have a PowerPoint slide with text on it; it’s almost all charts. And I’ll use the charts to tell a story.”

Conerly believes that econ bloggers have gained traction in recent years by personalizing their writing. Readers are more attracted to the individual voice of the blogger rather than traditional credentials like a teaching post at a prestigious university or a long list of papers published in peer-reviewed journals.

“I think those who blog have something they want to say, or maybe it’s just the guys I look at,” he explained. “But they tend to have a distinct point of view, and they’re much more likely to comment on work that supports their point of view. You also get a sense of personality…When I go to Brad DeLong’s blog, I have a good sense of how to interpret what he writes. I have certain biases that I bring to it having read his blog before.”

Antagonism Toward Traditional Media

One trend I noticed while interviewing these bloggers was that nearly every one mentioned an increase in the number of interview requests from traditional news outlets. As the econ bloggers have gained credibility, journalists have started tapping into their expertise. And while most bloggers are happy to oblige, at least one rejected the notion of trading in sound bites for seeing their name appear in an article. At the popular econ site Calculated Risk, the anonymous blogger posted a long-winded attack against the credibility issues that plague journalism.

“Dear reporters, we quote your stuff periodically, giving credit both to the reporter and the publication, under ‘Fair Use’ terms,” the blogger wrote. “We have no objection to your returning the favor. If you have an editor who will not allow that, and you think that the problem can be solved by getting one of us to drop our online personas, give you our real names, and say the same thing to you over the phone, so that you can get your editor to accept it as something other than just blogging, which everybody knows is untrustworthy rantings by anonymous nuts, you are making a faulty assumption about the relationship among us, our birthdays, and yesterday.”

Tyler Cowen

Tyler Cowen, like the other econ bloggers, has seen an increase in the number of media interview requests, but perhaps even more notable is the uptick in emails from those who are less knowledgeable about economics. Cowen is an economics professor at George Mason University, and he and his colleague Alex Tabarrok launched Marginal Revolution five years ago. The blog now has over 25,000 daily readers.

“The people who are sending me emails are much more layman than I’m used to having,” Cowen told me. “They’re asking for very basic explanations, which wasn’t the case six months ago…I respond to every email but I don’t usually have answers for their questions. I’ll refer them to previous coverage, or say I hope to cover it in the future, or I’ll refer them to another blog.”

And for some, it’s not just a matter of wanting to understand the crisis, but a desire that Cowen deliver a neatly packaged answer to the whole ordeal, an up-or-down vote on one policy proposal or another. Every day he gets questions asking whether the bailout package will work, or whether it’s even really needed at all.

“People always want that, and they’re begging me in the comments to give them an answer,” he said. “But we tend to give a more complex take on things, and that’s part of why I like blogging, because you have the room to do that whereas people in the media use sound bites. But no matter what you think, it’s a complicated issue and there isn’t a simple answer.”

Of course, not all econ bloggers exist to provide in-depth analysis of our current economic dilemma. A blog aptly called Sad Guys on Trading Floors shows just that — a series of images of traders burying their faces in their hands, overcome with sadness at the daily market plunges.

So far, hundreds of bloggers have linked to the site. The cliche that a picture is worth a thousand words does not even begin to explain how well these photographs encompass the dire economic situation that has come about over the past year; they may become iconic images to signify what is perhaps the worst economic downturn since the Great Depression.

Simon Owens is a former newspaper journalist and an associate blogger for MediaShift. He currently works as an online analyst for New Media Strategies. You can read more of his writing at his blog or contact him at simon[.]bloggasm [at] gmail.com.