There are plenty of ways today to pay little—or nothing—to read the news. There are free blogs. There's Facebook and Twitter. Who needs a subscription to a local newspaper?
Millions of Americans have decided they don't. But new research suggests this strategy may have costs in the long run. That's because newspapers are not like most things we buy. If you decide not to buy a watch or a cappuccino, you save money. But if you decide not to pay for a police department, you might save money in the short run, but end up paying more in the long run.
Whereas most of us treat newspapers like consumer products, new research from Paul Gao, Chang Lee, and Dermot Murphy suggests that they might be more like police departments. Gao, Lee, and Murphy looked at how newspaper closures might affect the cost of borrowing in local governments. What they found is a price tag that may give many taxpayers sticker shock.
This week on Hidden Brain, we look at an unusual case of a free-rider problem. And we ask, who bears the cost when nobody wants to pay?
Additional Resources
"Financing Dies in Darkness? The Impact of Newspaper Closures on Public Finance" by Paul Gao, Chang Lee, and Dermot Murphy, forthcoming in the Journal of Financial Economics
"The Effect of Newspaper Entry and Exit on Electoral Politics" by Matthew Gentzkow, Jesse M. Shapiro, and Michael Sinkinson in American Economic Review
"The Afterlife of Electronics" series by I-News
Hidden Brain is hosted by Shankar Vedantam and produced by Jennifer Schmidt, Rhaina Cohen, Parth Shah, Thomas Lu, Laura Kwerel, and Camila Vargas Restrepo. Our supervising producer is Tara Boyle. You can also follow us on Twitter @hiddenbrain.
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