The Role of the Media in the Greek Debt Crisis: The Organic Origination of Bias and its Reactive Reduction in a Competition for Credibility

Abstract

This thesis analyzes the role of the media in the Greek sovereign debt crisis from 2010- 2012 to evaluate claims that the media played a hostile or detrimental role in the resolution of the crisis and to contribute to the existing academic literature on media behavior and the role it can play in public policy. I use the Greek debt crisis to study the media because it presented an opportunity to play an important policy role. The approach of the Troika, the body responsible for crisis management, consisted of using austerity combined with official financing, and there were severe doubts as to the effectiveness of this approach. The media is responsible for sensibly informing citizens in a democracy on critical issues, and they had an opportunity to do so by critically evaluating current policies and proposing suggestions outside of the policy debates. I study 3 international outlets and 1 domestic outlet to evaluate their engagement with the debt restructuring debates. One reason is that policy makers denied restructuring as a viable option when there was evidence that it was necessary. The other is that debt restructuring involves payment or non-payment to investors, which entails strong interests on how and if it should be carried out. Thus the media may be constrained in their engagement with the restructuring debate if they cater to the interests of their readers rather than trying to objectively evaluate policy and serve the public interest. Research on media behavior has shown that the media is biased and others have presented frameworks explaining why and how bias may originate. One of these explains that bias originates from media firms’ desire to be credible and the fact that people believe confirmatory information to be more credible. Then, with more competition and feedback about reports, the same commitment to credibility will cause bias to reduce. My findings support this construction. Media firms mostly presented suggestions that aligned with their readers’ interests in the early phase. As time continued and more information and contributions to the restructuring debates occurred, outlets presented suggestions that ran contradictory to their readers’ interests, presumably to ensure that they presented all available information to remain credible. Thus, the commitment to remain credible reduced bias over time, as the media sensibly informed citizens on the situation, but they mainly played a lagging role in the debate by reacting to new information. Given these findings, I extrapolate from this case to present policy implications in the context of new developments in the industry. As competition and reputation seem to mitigate the effects of bias, increasing availability of information and sources online should be a powerful force towards accuracy in international issues. However, declining newspaper revenues may make it more difficult to support high quality international journalism, so only firms with substantial resources can afford it.