Here’s the first (six-minute) segment of my video interview with James Hamilton, the author of this month’s Book Club selection, All the News That’s Fit to Sell. We cover some basic introductions and the contents of Chapter 1. Some of the ideas he covers:

— “If you think that this is a problem, that there is too little information provided about government — and I offer some economic explanations for why there’s too little — what tools could economics provide you with?”

— “Economists view professions as something that have evolved in response to market failures. If there are situations where people have different amounts of information — teachers have more information than students, doctors than patients, journalists than readers, in some sense, at an individual level.”

And, after the jump, a complete transcript.

Josh: Let’s start with a little introduction — who are you, and tell me about this book.

Jay: Sure. I’m the Charles Sydnor Professor of Public Policy at Duke and the director of the DeWitt Wallace Center for Media and Democracy, and I’m an economist who studies information markets.

Josh: Now, when you say information markets, the media is an obvious example of that. What other kinds of things do you look at?

Jay: I started life as an environmental economist, and studied a program called the Toxics Release Inventory, where polluters have to tell you what’s coming out of their smokestack every year. And I studied how that affected their stock price, how residents used that information, how journalists used that information.

And then, one day, I read that Congress was considering creating a report card that listed who advertised on violent television programs. And the parallel between pollution and violence on television — the notion that they are both what economists would call negative externalities, spillovers on society where private actors don’t fully consider the cost — that led me to write a book called Channeling Violence: The Economic Market for Violent Television Programming, where I take environmental policy and apply it to a media market.

And that book was about something we might have too much of, TV violence. And then I ended up writing a book about positive externalities, All the News That’s Fit to Sell, where I talk about the underprovision of a different type of information, hard news about public affairs.

Josh: Now, journalists — I don’t want to stereotype them, but they tend to be tribal in their behavior. In a lot of cases, journalists feel that journalists should be the people who criticize other journalists — and that outsiders, economists, political scientists, are not in the best position to do that sort of thing. What kind of value do you think someone with your economic training and your background brings to something that has traditionally been self-policing, in a sense, in journalism?

Jay: Well, I agree with the journalists that you just don’t want another book bemoaning the lack of coverage of government, or just focusing on the failures. I view what happens in the market for public affairs as a market failure. So when I wrote the book, what I tried to do was say: If you think that this is a problem, that there is too little information provided about government — and I offer some economic explanations for why there’s too little — what tools could economics provide you with? And so what I tried to do in the book was say: How far can economic reasoning get you in explaining outcomes in media markets, and how far can economics get you in providing you with tools?

I think some people, when they read the book, however, said: Economists are hammers and the world looks like a nail. They thought that I must think that economics is arrogant enough to explain all outcomes in media markets. And that is not what I was trying to do. But what I was trying to do was say: How far could economics contribute to this discussion?

Josh: One thing I imagine must be something of a difficulty is that journalists pride themselves, at some level, at not being economically rational actors — in that they view their role as — the publisher may have a role of determining the business end of things, but the great Chinese wall between the news end and the business side gives journalists the idea that economic factors aren’t as direct a factor in their behavior as might be the case in other businesses.

Jay: That’s right. I think that in journalism school you are taught that a story is the five W’s: who, what, when, where, and why. And what I try to show in my book is that if you actually look close at media content, it is driven by a set of five economic W’s: who cares about a particular piece of information; what are they willing to pay for it or what would others be willing to pay for their attention; where else can people reach these readers or consumers; when is this profitable — that brings in the cost side to producing the story; and why is this profitable, and that brings in the definition of property rights to information.

And it is true that I don’t know any journalists who rolls out of bed and says: This is a great way to maximize profits; I can’t wait to answer those five economic W questions. But my argument is that the set of journalists who survive, the set of media organizations that survive, are the ones that are implicitly answering those questions.

Josh: As you said, you view this as a market failure. You’re trying to find ways to understand why hard news is not maximized, and to encourage that maximization. You’re just coming at it from a difference perspective than journalists who might have a similar sort of goal or aspiration.

Jay: Sure. And I think it’s interesting you used the word “profession” a couple of times. Economists view professions as something that have evolved in response to market failures. If there are situations where people have different amounts of information — teachers have more information than students, doctors than patients, journalists than readers, in some sense, at an individual level.

What society has done is create these expectations or norms in order to get you to do something that is not profit maximizing. So the fact that for instance, if you look at the profession — the profession of journalism leads reporters to write about what they think might be important rather than what might be profit maximizing. And so, the very thing that creates this dissatisfaction with the economic approach to media markets, I understand where it’s coming from.