Economics 101: Why is fake news so hard to eliminate?

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We are all used to reading news cautiously because of the authors’ biases may lead to exaggeration.

However, in the 21st century, we also have to be wary of reading entirely fabricated stories. Civil society organisations have correctly surmised that fake news poses a grave threat to social cohesion and stability, yet the phenomenon has so far survived attempts to eliminate it. What makes fake news so resistant?

To answer this question, we need to delve into the economics of fake news, which is the topic of a recent paper by Hunt Alcott (New York University) and Matthew Gentzkow (Stanford University), who looked into why anyone would benefit from articles that are either uninformative or deceptive.

Two factors are at play. Among those who seek news to gain information about the world, there is a susceptibility to what psychologists call “confirmation bias”, which is the tendency to seek information that is consistent with one’s existing views on a topic. Therefore, a commercially minded media outlet that knows its readers’ attitudes can potentially enhance its revenues by occasionally feeding them fabricated stories that reinforce their prior conceptions. An example is a magazine for supporters of a sports team: if a journalist makes up an article saying that the team is potentially going to acquire a superstar during an otherwise boring off-season, it might genuinely entertain readers.

Further, nefarious actors benefit from fake news by exploiting readers’ cognitive biases. In addition to succumbing to confirmation bias, people also suffer from limited cognition, meaning that they don’t have the mental resources to deeply analyse every article they read. Instead, they rely on things like the author’s reputation or friends’ recommendations. This flaw opens a door for suppliers of fake news to distribute falsehoods if they can deceptively get a re-tweet from a famous person. The supplier benefits either because they have an informational agenda, such as a political candidate seeking to smear an opponent; or because they make money from the articles being read, and an intelligently-written fabricated story is more likely to “go viral” than a truthful one, since many people are competing to report truthful events.

These factors have been present for centuries; so why is fake news apparently more of a problem than before?


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Social media - a new phenomenon - definitely plays a part. First, it makes the cost of attempting fake news very small compared to at any other point in history. By “democractising” media, social media has also democratised the process of generating and circulating falsehoods, meaning lots more of it. Second, social media embodies a business model for all news, real and fake, which includes advertising and “click”-related revenues. Whereas previously, only those seeking to subvert a system or opponent might have dabbled with creating fake news, now, a person sitting at home will do it just for the money, with indifference to any political ramifications.

In addition, political and social polarisation have also contributed. Confirmation bias is partially-derived from a desire to be both correct and righteous, and in a polarised society, the value of exhibiting such attributes is higher. When left- and right-wingers operate in a culture where they regularly support each other’s policy proposals (bipartisanship), then debates emphasise the opportunity to learn from those you disagree with, and you do not associate changing your mind with being immoral and/or ignorant. Today, sadly, with political opponents firmly entrenched, people become fixated on not backing down, and on disparaging those they disagree with, boosting confirmation bias beyond the levels stemming from one’s mental limitations.

So what can be done? One thing that definitely does not work is trying to legislate out fake news; there is simply too much of it; once a government starts to focus on specific cases, it will inevitably be accused of politicising the punishment, and of only prosecuting the fake news that challenges its own interests. It is also impractical since, in the age of the internet, what is one to do about fake news that originates elsewhere? If 50,000 of your citizens unwittingly re-tweet fake news from a reputable foreign outlet, are you going to put them all in prison?

Naturally, if the target of fake news is an individual or company, then there exist channels, such as law suits for slander. But what if the fake news is about countries and governments? Or about large groups of people? For example, if I invent a story saying: “immigrants are more likely to kill you than non-immigrants”, whose job is it to hold me accountable?

If you search the internet for solutions, then you won’t find many compelling ones. One popular one is “teaching people to spot fake news,” but this suffers from a key flaw: the teaching material exists, for free, on the internet, yet people aren’t really interested, probably due to latent demand for fake news. Therefore, a government mandate is likely to be ineffective.

We may just have to tolerate fake news as an inevitable corollary of social media.

Omar Al-Ubaydli (@omareconomics) is a researcher at Derasat, Bahrain.