Carnac the Magnificent Business Journalist

Via Romenesko I came across this transcript of a discussion of one of my journalistic pet peeves, what “On the Media” host Bob Garfield calls “single factor analysis”:

Every trading day, reporters at the Associated Press, Bloomberg, Reuters, USA Today, the Wall Street Journal and a dozen other news organizations are expected to distill millions of discrete financial decisions and divine a single motivating factor! Some days it’s a Commerce Department report on business inventories. Sometimes it’s a jump in IBM’s earnings. Sometimes it’s the mysterious “technical factors” or dropping oil prices or terrorism jitters or investor optimism or the magical, all-encompassing “profit-taking.”

This is a staple of stock-market reporting. The Dow rose/fell we are told, and then we are told — with authoritative certainty, why. At best, this is a correlation reported as a cause. At worst, it’s an oversimplified falsehood.

The common way of avoiding a baldly overstated “single factor analysis” is to include a qualifying phrase and an attribution for the claim. “Some analysts say …” Or “… the rise/fall may be due …” These qualifiers ought to be as mandatory on the business pages as the extensive use of the word “alleged” is in crime reporting. Suspects are considered innocent until proven guilty. Theories about fluctuations in the stock market ought to be considered speculative until proven true.