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6/4/2018 12:23:00 PM
COMMENTARY: Academic paper tracks effect of newspapers on public finance

Bob Zaltsberg, Herald-Times Editor

"Local newspapers hold their governments accountable.”

That’s the first line in the abstract describing an academic study released in May titled: “Financing dies in darkness? The impact of newspaper closures on public finance.”

Study authors are Pengjie Gao from the University of Notre Dame; Chang Lee from the University of Illinois at Chicago; and Dermot Murphy from the University of Illinois at Chicago.

Their research cites a number of other studies about the importance of local newspapers in keeping watch on governmental agencies as they build to additional conclusions: that after a newspaper closes in a community, municipal borrowing costs rise, government wage rates rise, the number of government employees rises, and closely related, tax dollars paid by citizens rise.

The H-T is not planning to go anywhere.

The work of Gao, Lee and Murphy make a case that you should be happy to hear that. The study illustrates the value we and other local newspapers provide a community by watching over the actions of governmental units.

The introduction to the paper quotes a Federal Communications Commission report from 2011 that suggests what can happen when local news coverage erodes:

“... in many communities, we now face a shortage of local, professional accountability reporting. This is likely to lead to the kinds of problems that are, not surprisingly, associated with a lack of accountability — more government waste, more local corruption, less effective schools and other serious community problems.”

Another survey cited showed how readers in a community especially value and trust coverage of crime, taxes, local government activities, schools, the local job market, arts events, social services, neighborhood events and more. They cite other research that supports the importance of newspapers in covering local politics and elections.

Their own research, they note, is focused “on the effect of newspaper closures on public finance outcomes, which has never been explored, to the best of our knowledge.”

The researchers’ paper proposes and finds that reduced newspaper coverage after a publication leaves the market can “affect long-run municipal borrowing costs through the government inefficiency channel, and provide evidence that government inefficiencies are more prevalent following a newspaper closure.”

It’s important to note the researchers use of “closure.” Newspapers dropped out of their data if they actually closed, were absorbed by another publication, merged with another publication into a new newspaper, or reduced their daily publication cycle to fewer than four days a week.

The study has much supporting documentation in the way of charts, graphs and mathematical formulas. The conclusion is pretty simple: “Newspapers play an important monitoring role for local governments. Other (academic) papers have shown that the loss of a local newspaper leads to worsened political outcomes in the region, and we illustrate that there are worsened financial outcomes as well.”

One of our main goals at the H-T is for our reporters to keep track of issues that come before local government officials. We think it’s important to examine how public money is being spent, how rules and regulations are affecting members of the public and how our public officials are addressing problems brought to their attention.

At our best, we can compare issues facing our community to issues in like-sized communities, explaining different potential solutions and the impact they might have. We can look at data to see trends over time; that is, are we doing as well addressing a particular issue as we were a decade ago?

We are well aware we don’t always cover all the issues important to readers in the depth we or you would like. I would ask that readers continue to call us — managing editor Sarah Morin, or me — with issues we should dig into or with ideas for feature stories about people and events you believe our readers should know more about.

Finally, thank you for your support.

And thank you to H-T reader Charles Trzcinka, James and Virginia Cozad Professor of Finance at the Kelley School of Business at Indiana University, for first drawing this academic paper to my attention.

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Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR

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