Sam Schulhofer-Wohl is an Assistant Professor of Economics and Public Affairs at Princeton's Woodrow Wilson School, whose research interests include macroeconomics, risk and econometric methods - yet as a former journalist for the Milwaukee Journal-Sentinel, it is not surprising that Schulhofer-Wohl would conduct a study on how the closing of a small local newspaper could impact public life and politics.

He recently published a working paper with Princeton economics student Miguel Garrido titled, “Do Newspapers Matter? Evidence From the Closure of The Cincinnati Post,” for the National Bureau of Economic Research. The study found that after the Post published its last edition on New Year's Eve 2007, leaving the Cincinnati Enquirer as the only daily newspaper in the market, fewer candidates ran for municipal office in the suburbs most reliant on the Post, incumbents became more likely to win re-election, and voter turnout fell.

The Woodrow Wilson School spoke with Schulhofer-Wohl about the study and about what the findings may mean in other areas of the United States in light of the newspaper crisis in America.

Woodrow Wilson School (WWS):  Please tell us about your study.

Sam Schulhofer-Wohl (SSW):  This is joint work with Miguel Garrido, who is an undergraduate major in economics here. We studied what happened to municipal politics in the suburbs of Cincinnati after a newspaper, the Cincinnati Post, closed.

Up until 2007, there were two papers in Cincinnati, the Cincinnati Post and the Cincinnati Enquirer. They had what’s known as a joint operating agreement, which is an arrangement where they can combine their business operations and set prices together, so they can set much higher advertising and subscription rates than if they had to compete on those things. They got an exemption from anti-trust laws to do this, but in return they had to keep independent newsrooms.

At the end of 2007, that agreement expired and the Cincinnati Post closed because they couldn’t find a way to keep going without the agreement. There were some suburbs that were getting virtually all their local news coverage from the Post, so they lost a lot of coverage when the Post closed.

We asked what that did to local politics - and what we find is that the closing of the Post appears to have reduced voter turnout and reduced the number of people running for office, as well as raised the probability that incumbents would be re-elected.

But, the big cautions for this are first, we have a very small sample of 48 suburbs, so there’s only so much you can learn statistically from such a small sample; there’s a lot of statistical uncertainty in these results. And second, we’re looking at this one city, this one newspaper, this one moment in time. It’s hard to know whether things would be different in other cities that perhaps are more wired, like Seattle, for example, where the Post-Intelligencer recently closed, or in places where the paper provided different kinds of coverage to begin with. Certainly, as the internet develops, maybe newspapers will play a different role than they do now, and maybe even now they play a different role than they did 20 years ago.

WWS:  How did you determine the causal effect of the paper closing and its impacts on public life in the local areas?

SSW:  We did database searches and counted up all the articles about a given town in a given year in the Post, and all the articles about that town that year in the [Cincinnati] Enquirer - and some of these towns, 95 percent of the articles written about that town are in the Post. You think, well, a town like that is probably losing an awful lot when the Post closes. Now, of course it’s possible that the Enquirer picks up [coverage] a lot when the Post closes, and if they did completely replace what the Post was doing, we should find no impact on political outcomes.

But what we have evidence of is that whatever steps the Enquirer took to step up its coverage after the Post closed, whatever other media were doing, whatever was being covered via the web, that didn’t fully replace this coverage that the Post provided.

In terms of how we figured out that this was the causal effect of the Post and not something else, let me give a very specific example of what you might worry about, and how we sorted it out. We looked at voter turnout, and we’re comparing 2008 elections to 2004, and we know 2008 was a high-turnout year because of the candidacy of Barack Obama, so we needed to control for that. We considered the suburbs that were getting coverage from the Enquirer as a control group, to see what happened to voter turnout –in those suburbs, it was as if the Post had never closed, because the Post wasn’t as important there, and we were able to see how much turnout went up from 2004 to 2008 in those suburbs. Then we looked at suburbs that were getting virtually all their coverage from the Post, and voter turnout went up in those suburbs, too, but not by as much. This gap is the effect of the Post closing.

WWS:  And since fewer people vote, are incumbents more likely to win?

SSW:  We look at this in a few ways. What does a newspaper do? One thing is it informs you of the local issues, so if you’re uninformed you may not bother to vote. Another is that by reading about your town in the newspaper, it may provide some social glue, that is, make you feel connected to your community, and then if you feel connected maybe you go vote because that’s what good citizens do.

To be clear, we’re testing whether these things are true. All this seems to suggest that perhaps newspaper coverage would raise voter turnout or that losing a newspaper would reduce turnout. In addition, in terms of candidates and incumbents, one thing a newspaper might do is tell people whether the incumbents are doing a good job or not, and if people don’t have that information, they would be less likely to turn the incumbents out of office than if they found out the incumbents were doing a bad job.

Also, newspaper coverage may inspire people to run for office because they might say, “I don’t like the job the incumbents are doing, I can do better, I’m going to run,” and then we would expect to see more people running when there’s a local newspaper published. In addition, a newspaper can make it easier for challengers to get their message out: The incumbent has a platform already because they’re the incumbent. But again, it’s an empirical question whether that’s true, so what we’re doing is testing whether those kinds of stories make any sense.

WWS:  What is the value of using the economic sciences to investigate public policy?

SSW:  Partly there is a direct connection to economics here. Congress had an explicit rationale for creating this anti-trust exemption, that it was supposed to be good for democracy, but we as economists know that there are real costs to allowing monopolies and to having anti-trust exemptions, and it turns out no one ever investigated whether the benefit that Congress was looking for actually occurred. Just from an economic perspective, Congress had in mind a tradeoff for paying the price of an anti-trust exemption, and we should check whether they got what they were looking for.

I think what’s happened is that in most cities in the U.S. it’s become infeasible to have two competing newspapers if they don’t have these anti-trust exemptions, because if they don’t have one, they get into a war of attrition over ad rates where they just give everything away. They lose money like crazy, but each hopes that the other paper goes bankrupt before them because then you’re the monopolist, which is a great deal. That’s gone on for 40 or 50 years; what’s happened more recently is that even if you are a monopoly newspaper, you suddenly have a lot of competition from the internet. Readers are going to the internet not just to get their news but also because there’s all this other stuff they can do with their time by browsing the web, and they don’t necessarily want to spend as much time reading the paper.

Advertisers also have much better ways to advertise on the internet than in the newspaper because you can target your ads very specifically. You don’t have to publish an ad in a newspaper that goes out to 200,000 people, only 1,000 of whom might even be interested in your product. You’ve got craigslist, which is free for classifieds, which are a huge chunk of newspapers’ revenue. So this competition is taking away a lot of the revenue that newspapers had, and local news coverage is very expensive - and when this advertising revenue goes away it’s unclear how to pay for local news.

WWS:  What kind of model do you think would work, in terms of keeping newspapers viable in the digital age?

SSW:  This is an incredibly difficult question, but I can tell you what I think won’t work. One idea is that we should have non-profit newspapers funded by endowments. But if you do a back-of-the-envelope calculation of what is required, this may work for papers like the New York Times and the Washington Post - big, national newspapers - but the problem is that a small local newspaper has a fairly substantial staff, and the pool of possible donors to a smaller paper like, for example, the Times of Trenton is just not that big relative to a national newspaper. I’m skeptical this non-profit model could ever generate enough money for local papers of the size that we’ve had.

Another idea is to somehow get readers to pay for their news, but the challenge is that historically, readers have never on a large scale paid anything approaching the full cost of the news they receive. Most of newspapers’ revenue came from advertising.  Again, I think there’s more hope of doing this on a national level because if you have a website like Politico, you can find enough fanatics nationally to pay for this detailed coverage of Congress - but it’s just as expensive to cover a city council as it is to cover Congress, only there’s a lot fewer fanatics interested in the Trenton City Council than the U.S. Congress. So maybe we can get that to work for covering Congress; I’m not sure we could get it to work for local news.