How Deceptive Headlines Body the Narrative

The Monetary Occasions just lately ran a narrative on pension funds and personal credit score with the headline, “US public pension funds pare allocations to non-public credit score. Pullback highlights considerations about looser underwriting requirements and rising credit score dangers.”

On the floor, it was about institutional buyers rising cautious on the booming asset class. However look nearer, and also you’ll see one thing extra telling about the best way information will get written — and consumed.

The article opens with a small pension fund in Cincinnati that has tapped the brakes on personal credit score. The narrative builds round skepticism, danger, and pullback. Solely on the very finish do readers be taught that the New York Metropolis pension fund — with over $300 billion below administration — is totally dedicated to non-public credit score. In different phrases, the story’s most important character wasn’t simply optimistic on the area, however “all in.”

This isn’t only a quirk of editorial alternative. It’s a symptom of a bigger downside.

In media, the outdated cliché is true: if it bleeds, it leads. Readers are drawn to danger, worry, and hazard — way over to stability or success. Consideration drives clicks, clicks drive subscriptions, and so tales are structured round cautionary tales. A headline warning about establishments turning away from an asset class will outperform one that claims a $300 billion pension plan is doubling down.

The issue is that this framing distorts actuality. An informal reader may stroll away believing that pension funds writ massive are abandoning personal credit score. The reality — that the nation’s largest public pension methods stay enthusiastic contributors — will get buried. In monetary markets, notion issues. And the notion created by damaging framing usually overshadows the underlying knowledge.

This bias towards negativity isn’t confined to conventional media. On social platforms, algorithms reward outrage, worry, and controversy. Posts highlighting dangers and crises are shared extra broadly than posts highlighting regular progress. The cycle feeds itself: customers have interaction extra with negativity, so producers provide extra of it.

What’s misplaced on this cycle is proportion. A tiny pension fund in Ohio isn’t remotely corresponding to the NYC Retirement System. But the story elevates the smaller outlier to headline standing whereas relegating the a lot bigger participant to the fantastic print. The result’s a warped image — one that matches the negativity mildew however obscures the bigger reality.

The FT article may have been written the opposite method round: “NYC’s $300 Billion Pension Fund Goes All In on Personal Credit score — However Not Everybody’s Satisfied.” That model tells the identical information, however leads with the weightiest knowledge level and makes use of the Cincinnati fund as context. As a substitute, readers obtained the inverse, as a result of dangerous information — or not less than skeptical information — makes for a stickier headline.

For buyers, policymakers, and the general public, this issues. Media framing shapes how we perceive markets, danger, and alternative. When negativity constantly drowns out proportion, we danger making selections based mostly on skewed perceptions.

And for society at massive, the identical forces are at play. Politics, economics, well being, tradition — essentially the most pessimistic interpretations are inclined to dominate. Not as a result of they’re at all times proper, however as a result of they’re essentially the most clickable.

We will’t change media incentives in a single day. However we will be extra conscious as customers. Ask: What’s the complete image? What information have been downplayed? The reality is never as darkish because the headline.

The Cincinnati fund is perhaps cautious. However the $300 billion in New York is dedicated. That rigidity is actuality. And actuality is at all times extra balanced than the best way it’s introduced.

👉 That’s the true story — not nearly personal credit score, however about the best way our info ecosystem more and more rewards pessimism over proportion.

Michael right here. Sorry, I didn’t write that, ChatGPT did. Lame, I do know. However fairly rattling good, proper? I needed to jot down this story, however nonetheless unpacking containers after the transfer and, nicely, I obtained lazy. Pressed the straightforward button. Ben and I spoke about this story, which fired me up, and rather more, on this week’s Animal Spirits.