Bots amplify the spread of fake news, and harm economies, new research shows
Automated accounts or bots play a pivotal role in the spread of fake news or misinformation. The spread of such misinformation can have polarizing effects on a society and prevent any consensus from evolving, leading to a grid-lock, and bringing down welfare levels in the society, a new National Bureau of Economic Research (NBER) working paper by Marina Azzimonti and Marcos Fernandes argues. The researchers show that even if only a tenth of users in a social network fall for fake news, it can lead to significant misinformation and polarization because of network effects, i.e., the reliance of other users on them for news and views. The researchers also show that a society that is successful in eliminating a source of fake news promoting one extreme of the political spectrum may end up worse off due to the unintended consequences of making the other extreme relatively more powerful. This, in the end, would generate greater misinformation and lower welfare, despite effectively reducing polarization.
American firms tend to use their charitable foundations strategically to push their corporate agendas, according to a new NBER research paper by Marianne Bertrand, professor of economics at the University of Chicago Booth School of Business, and co-authors. Their study found that grants by corporate foundations to a congressional district rise when the representative gets a seat on committees that are relevant to the company’s line of business. The researchers find a similar pattern in funding to political action committees—organizations that pool funding to lobby for a specific cause or party. About 7% of charitable donations by firms are politically motivated to influence policies, the authors estimate. Given that the corporate foundations are tax-exempt, this represents a form of lobbying that is directly funded by taxpayers, the authors argue.
A new index of financial literacy in India finds that Bihar had the lowest share of financially literate population (11%) across all states. Writing in the Economic and Political Weekly, the researchers, Manuela Kristin Günther at the Overseas Development Institute, London, and Saibal Ghosh at the Qatar Central Bank, prepared this index based on data from the second wave of the Financial Inclusion Insights survey that was conducted in 2014. Employed, educated, urban non-poor men had higher financial literacy rates compared to others.
A study of Bangladesh’s workfare programme by the World Bank economist, Yoonyoung Cho, and Unmul Ruthbah, associate professor at the University of Dhaka finds that participation in the programme increased households’ per capita consumption, spending on higher quality protein such as dairy, fish and meat, and led to greater investments in health. It also reduced outstanding loans and reliance on loans due to shocks. As opposed to unconditional cash transfers, workfare programs also provide work experience and build public assets and infrastructure. However, there is no conclusive evidence on the value of infrastructure thus built and efficiency of project implementation. It’s also not clear as to how useful the work experience is in building human capital and generating future employment.
Also Read: Does Workfare Work Well?
The past few years have increasingly witnessed American CEOs taking public positions on contentious and politically charged issues, in a break from the past. A new Harvard Business Review article by Aaron Chatterji, associate professor at Duke University’s Fuqua School of Business and Michael W. Toffel, professor at Harvard Business School analyzes this phenomenon. The authors argue that the rise of social media, a fractured media landscape, and the demands of politically conscious stake-holders have led CEOs to assume a more activist mantle. “Regardless of whether CEOs and other organizational leaders feel a responsibility to take a public stance on contentious issues, their companies’ customers, employees, business partners, and investors are being swept along in the societal shift toward greater political polarization,” the researchers write.
Also Read: Divided we lead
Economics Digest runs weekly, and features interesting reads from the world of economics