"False Imbalance” in Reporting on Economic Policy

One obstacle to productive public discourse and deliberation is a syndrome whereby the media, whether mainstream or otherwise, present policies in a manner that could be called “false imbalance.”  No, I don’t mean “false balance.”  False imbalance is quite different. It refers to the temptation to cast in a negative light, policies that in fact are reasonable attempts to balance competing objectives.  Examples can be drawn from health care, fiscal policy, and monetary policy.

The problem of “false balance” is a familiar concept, related to “false equivalence” and “bothsidesism.”  A quintessential example arises in reporting on climate: Media sometimes give the impression that skeptics who question the scientific case behind anthropogenic climate change warrant comparable weight to those experts who say it is a genuine problem that needs to be addressed. The motive for some news outlets may be an attempt at fairness, giving due weight to dissenting voices; but the net effect is to give a false impression of where the overwhelming preponderance of the scientific evidence lies.

“False imbalance,” in contrast, is not a familiar concept. But I believe it should be.

It describes reporting that gives the impression that a particular policy is generally considered bad or unpopular when the reality is that the policymaker has appropriately sought to strike a balance or tradeoff between competing forces or goals.  Typically, a story headline misleadingly lumps together critics coming from one direction with critics coming from the opposite direction, leaving the reader with the takeaway that everybody hates the policy.  The policy appears to be imbalanced when it is not.

Example 1: Health care policy

A prime example of false imbalance arose in reporting on Obamacare.

In the years after the Affordable Care Act was passed in 2010, journalists reported that a majority of Americans opposed it.  (For example, it was reported that in a 2012 Pew poll, 48 % disapproved, versus 43 % who approved.)

The poll summaries tended to lump (i) those respondents who opposed Obamacare because they thought it went too far and entailed too big a role for the government in people’s lives, together with (ii) those respondents who opposed it because it didn’t go far enough, didn’t bring health insurance to everyone, e.g., via a single-payer plan like the one in Canada.

In a 2013 CNN poll, 69 % of respondents were reported as opposing the Affordable Care Act.  But  22 % of the 69% who were classified as opposed (that is, 15 percent of those polled) said that the ACA  did not go far enough).  Similarly, a 2013 Kaiser poll found, when breaking up those who viewed Obamacare unfavorably, that 85% did so because they thought it went too far (=33%/39%) and 15% because it did not go far enough (= 6%/39%).

More recently, during Donald Trump’s presidency, the fraction of Americans who wanted to go beyond the ACA rose (and the share favoring its repeal fell).  The fraction who thought it did not go far enough, and who favored a “Medicare for All” single-payer system, was reported  (NPR, Dec. 2017) to be up sharply in a November 2017 Kaiser poll, to 62

NBC reported in March 2020 that the share supporting Medicare for All was at 43%, but that the share of voters saying that Obama’s reform had been a good idea had come to  42%, more than the 35 % who still thought it was a bad idea.

Most of the time, the best policies lie somewhere in between the extremes of a spectrum.  At one end of the public-private spectrum, relatively few Americans want all health care to be administered by a government agency like the UK’s National Health Service. At the other end of the spectrum, probably even fewer are so obsessed with the principle of individual responsibility, that they want to ban ambulance drivers from picking up accident victims lying on the side of the highway until they have checked to make sure they have private insurance.  The question is how to find the right balance.

Americans have come to support a reasonable balanced policy. This happened after, on the one hand, (i) they realized that Republicans had failed for 10 years to suggest a specific alternative with which they wanted to replace Obamacare, while on the other hand, (ii) more voters had become aware that the Medicare for All proposal, on which Bernie Sanders campaigned for president twice, would take away private health insurance.  By March 2020, a whopping 73 % of voters (in the NBC/WSJ poll) had come to favor a sensible way of increasing further the number of Americans covered: allowing them to participate in a public option. This would be a strengthening of Obamacare that Obama himself wanted, had he seen it as politically viable, and that Biden supported in his 2020 campaign.

False imbalance – the summary of a balanced policy by reporting that everyone is opposed to it, without being clear about the alternatives – delayed rather than facilitated the public deliberative process.

Example 2: Biden fiscal policy

The recent fiscal policy offers another area where the current Administration has struck a balance between extremes.  President Biden passed his $1.9 trillion American Rescue Plan in March 2021. It included large increases in social spending for such priorities as fighting Covid-19 and relief for impacted workers.  He is still working to get Congress to agree also to infrastructure spending.  From the viewpoint of traditional fiscal conservatism, these are very big expenditures.  But he has consistently opposed unaffordable proposals from politicians some further to the left, such as forgiving all student debt or adopting a universal basic income.  His position in the middle of the left-right spectrum is popular.

To help pay for that spending, he proposes collecting more of the taxes that are owed to the federal government under current law, together with substantial increases in taxation of those with incomes over $400,000 a year and those with billion-dollar estates.  But he has avoided less practical proposals from the left such as an annual wealth tax.   Tax increases seldom poll well in isolation, but the combined package of infrastructure spending and the tax proposals strikes an intelligent balance.

Example 3: Monetary policy & inequality

Like most central banks, the US Fed has long sought to strike a Goldilocks balance between a monetary policy that is too loose (threatening inflation) and too tight (yielding slow growth and unemployment). Central banks have been accused over the last decade or so of not paying enough attention to the goal of equity in income distribution, i.e., not just the size of the pie, but how it is divided up. Worse, they have been accused of exacerbating inequality.

As a new BIS report notes, the most obvious policies to address income inequality are not in the realm of monetary policy, but rather elsewhere in the government.  E.g., tax policy, among other levers.  (That is why Fed officials used to stay away from the subject in their public comments.)

One reads frequently that central bankers have exacerbated inequality.  But if one reads carefully, the inequality critics follow two opposing lines of logic.

Some argue that easy money exacerbates inequality.  One channel is that low-interest rates and quantitative easing help push up prices of stocks and other assets, which largely benefits the rich.  This is clearly indeed a real phenomenon.  There also exist claims that inflation hurts the poor.

Other inequality critics argue that easy money combats inequality.  They complain that central banks have often worsened inequality by tightening it before necessary.  A “high-pressure economy” gives jobs, not just to the conventionally unemployed into employment, but even to those on the margins of the labor force: the long-term unemployed, minorities, and the disabled, or who have criminal records or lack a persuasive employment history. Again, this is indeed a real effect.  Also, inflation is clearly good for debtors, who tend to have lower income on average than creditors.

The hypothesized effects, though they run in opposite directions, are both genuine.  They work to cancel each other out.  For most countries, it is not clear which effect dominates.  To accuse a central bank of exacerbating inequality without recognizing this tension is to fall prey to the syndrome of False Imbalance.