Last week, during the frantic hunt for the second suspect in the Boston Marathon bombings, CNN wrongly reported that a man had been arrested. The news network soon corrected its error, but not in time to avoid a chorus of "how could this happen?" from, mostly, other media. Their explanations centered mainly on the pressures of the 24-hour news cycle. But for the real reason, you'd have to ask Sir Thomas Gresham.
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Gresham was an advisor to Queen Elizabeth I and an exceptionally wealthy London merchant. Having realized that British money was losing its value because of the shoddy coinage standards of the queen's predecessors, Gresham suggested she create a new, more trustworthy money that could not be confused with the old specie. This act -- though not the first of its kind in recorded history -- gave rise to what is now known as Gresham's Law: "Bad money drives out good."
The law makes a simple but powerful point: Why would you go to the trouble of obtaining genuine legal tender when, at a lower cost, you can get something that works just as well? Joseph Schumpeter may have explained the law best in his History of Economic Analysis, pointing out that "if coins containing metal of different value enjoy equal legal-tender power, then the ‘cheapest' ones will be used for payment, the better ones will tend to disappear from circulation."
The same is true for the news. If bad news -- in the sense of the quality of the news, not its content -- is just as valuable as good news, then good news will eventually disappear from the market.
What makes news good? It's a subjective term, but I would argue for a definition something like this: information that is accurate, presented so that the facts speak for themselves, and eventually verifiable. These are the qualities that make news useful, accessible, and trustworthy to as broad an audience as possible.
Yet good news is not the only kind of news that has value in the market. News doesn't just provide information; it can also offer entertainment and a vicarious emotional experience. Even bad news, which is not accurate or verifiable, can supply these pleasures. The thrills of bad news may be fleeting and cheap, but they are thrills nonetheless.
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