Seminars

Minority and low-skill individuals are more heavily exposed to shocks to the local economy than white and high-skill individuals. As a consequence, they should pay more attention to local news. Using a new comprehensive survey of adults in large U.S. cities, we show that this conjecture is true. Disadvantaged individuals typically have stronger preferences for almost all relevant local news topics ranging from crime and local politics to schools and the local economy than high-skill and white individuals. At the same time, these disadvantaged individuals have been more strongly affected by the negative impact of the digital revolution on the quality of traditional news providers. High-skill and white individuals 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. To gain additional insights into the welfare consequence of the gaps and assess potential policy interventions, we develop and estimate a model of news production and demand for local news. Our findings suggest that the loss of the local newspaper (television) reduces welfare on average by $1017 ($1203). Welfare losses are larger for disadvantaged individuals.