Magnitude, Proximity, and Relevance of News
A media outlet’s news presentation depends upon the judgment of the reporter. He or she determines the focus of a story and the facts to emphasize. Critics of media delivery argue that this process is based on market research, rather than objective reporting. However, the definition of news can be subjective and the journalists prescribe to a set of standards that help them refine their judgments. There are three major criteria for judging whether news is news: Magnitude, Proximity, and Relevance.
When it comes to judging news quality and relevance, proximity is of paramount importance. A close proximity may increase the relevance of a story for many readers in a certain area, culture, or region. In such cases, the news is viewed as more relevant, leading to increased multiplication. Also, news with familiar actors and faces may increase the relevance of a story. In these situations, proximity may play an important role in determining a story’s relevance.
In addition, if a news item involves a conflict, the likelihood of it appearing in a relevant article increases significantly. Additionally, news items with high positions on search engine results pages tend to be viewed as higher in credibility. As a result, the relevancy of news increases with its prominence, and this translates to higher reader engagement and click-through rates. According to this study, the relevance of news increases by 42 percent when it is associated with a conflict. Further, the relevance of a news item’s source increases by 63 percent when it is attributed to its prominence.
Considering the complexities of information delivery and the nature of the human attention, one study examined the effect of bodily and geographic proximity on the attentional engagement of readers. The results suggested that proximity to the news content and the platform itself affected reader engagement. For example, when reading crime news on a smartphone, subjects’ heart rates slowed and their self-perceived engagement increased. Further, local news reports were not significantly different from international news reports.
The magnitude of news is a measure of how much an event affects the price of a market. In the current world, we know that news about the economy and central banks can impact markets in different ways. For example, central bank announcements cause lower comovement for stocks and bonds. Research in this area provides helpful information for academics and practitioners who wish to analyze the impact of news. This paper explores the utility of the magnitude of news in financial markets.