Pessimistic Bias on CNBC’s Squawk on the Street

Every morning on the way to school growing up, I listened to Squawk Box on CNBC.  Every day without fail, the hosts would comment on the possibility of a recession in the near future.  Even strong GDP growth and low unemployment numbers were followed with cautionary comments about impending doom in the market. 

This negative outlook is a reflection of the pessimistic bias Caplan talks about in The Myth of the Rational Voter.  Non-economists have an incentive to over-estimate the severity of economic problems.  Because CNBC has to compete with other radio shows, they relay news in a way that reflects this pessimistic bias in order to get more viewers to tune in to the show.  When more people listen, CNBC makes more money from their advertisers. In sum, Carl Quintanilla and David Faber relay news that over-estimates the possibility of a recession because this reflects the pessimistic bias of the populous, which gets more people to listen to their show every morning.