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Media Bias and Advertising: Evidence from a German Car Magazine

Ralf Dewenter, Helmut-Schmidt-University Hamburg & Ulrich Heimeshoff, DICE, Heinrich-Heine-University of Duesseldorf, 2014-01-24

This paper investigates the existence of a possible media bias by analyzing the impact
of automobile manufacturers’ advertisements on automobile reviews in a leading German
car magazine. By accounting for both endogeneity and sample selection using a
two-step procedure, we find a positive impact of advertising volumes on test scores.
The main advantage of our study is the measurement of technical characteristics of
cars to explain test scores. Due to this kind of measurement, we avoid serious biases
in estimating media bias caused by omitted variables.

volume:65, Issue 1
JEL:L150, L820
keywords:car_magazines instrumental_variable_estimation media_bias selection_model

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