How Deceptive Headlines Body the Narrative

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

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

The article opens with a small pension fund in Cincinnati that has tapped the brakes on non-public credit score. The narrative builds round skepticism, threat, 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 personal credit score. In different phrases, the story’s most vital character wasn’t simply constructive on the house, however “all in.”

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

In media, the outdated cliché is true: if it bleeds, it leads. Readers are drawn to threat, concern, and hazard — excess of 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 non-public credit score. The reality — that the nation’s largest public pension techniques stay enthusiastic individuals — will get buried. In monetary markets, notion issues. And the notion created by destructive framing usually overshadows the underlying information.

This bias towards negativity isn’t confined to conventional media. On social platforms, algorithms reward outrage, concern, and controversy. Posts highlighting dangers and crises are shared extra broadly than posts highlighting regular progress. The cycle feeds itself: customers interact 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 akin to the NYC Retirement System. But the story elevates the smaller outlier to headline standing whereas relegating the a lot bigger participant to the tremendous print. The result’s a warped image — one that matches the negativity mould however obscures the bigger reality.

The FT article might have been written the opposite means round: “NYC’s $300 Billion Pension Fund Goes All In on Non-public Credit score — However Not Everybody’s Satisfied.” That model tells the identical info, however leads with the weightiest information level and makes use of the Cincinnati fund as context. As a substitute, readers bought the inverse, as a result of dangerous information — or at the least skeptical information — makes for a stickier headline.

For traders, policymakers, and the general public, this issues. Media framing shapes how we perceive markets, threat, and alternative. When negativity persistently drowns out proportion, we threat 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 likely to dominate. Not as a result of they’re all the time proper, however as a result of they’re essentially the most clickable.

We are able to’t change media incentives in a single day. However we might be extra conscious as customers. Ask: What’s the total image? What info had been downplayed? The reality isn’t as darkish because the headline.

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

👉 That’s the actual story — not nearly non-public credit score, however about the way in which our data 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, effectively, I bought lazy. Pressed the straightforward button. Ben and I spoke about this story, which fired me up, and way more, on this week’s Animal Spirits.