Does exposure to politicized news affect policy choice? Previous research has shown that variation in news exposure affects voter shares (Martin and Yurukoglu 2017), but there is little evidence on downstream policy impacts. We combine data on television viewership and public finances in U.S. localities to estimate effects of news exposure on policy choice. Exogenous variation in news exposure comes from random differences in channel ordering across localities, where the focus is on variation in the conservative Fox News Channel.
We establish that a lower channel number increases viewership but is unrelated to historical covariates related to local politics and finances. The instrumental variables analysis shows that random variation in Fox News viewership is related to changes in local revenue generation and expenditure choices.
Politicized news affects local policy choices. These results will be relevant to recent policy debates on media regulation.