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A new study highlights how disruptions in classifieds impacted political coverage, creating opportunities for more extreme candidates.

In the olden days before the mid-1990s, when people had something to advertise—like a car, apartment, or job—they could phone their local newspaper and place a tiny ad that would reach a mass audience of car buyers, apartment hunters, job seekers, and anyone else flipping through the classifieds section.

Then came Craigslist. Since its launch in San Francisco in 1995, the online classifieds platform has spread to more than 400 locations in the United States today. The slow rollout of the largely free, bare-bones website effectively killed off the humble newspaper classified ad, and with it, a lucrative market that had kept many papers afloat.

It's not news that Craigslist was a major contributor to the precarious state of print journalism in the United States. Yet a recent analysis by Gregory Martin, an associate professor of political economy at Stanford Graduate School of Business, and Milena Djourelova of Cornell University and Ruben Durante of the National University of Singapore adds new detail to the story of what happened next and its surprising effect on American politics.

The paper is in the journal Review of Economic Studies.

At the turn of the millennium, newspapers relied on classifieds for an average of 30% of their revenues. Martin and his colleagues found that the loss of this revenue led newspaper executives to cut costs largely by shrinking local political news coverage. "We showed that sports and entertainment writers were more or less unaffected, while the local politics desk was cut first in response to the shock," Martin says. "I didn't really anticipate that the effects would be so concentrated in political reporting."

He and his colleagues found that this shift in coverage not only led to declines in readership but also had downstream effects far from the newsroom—contributing directly to the polarization that's become a feature of U.S. politics.

The Craigslist shock

Craigslist rolled out in an idiosyncratic city-by-city expansion. This staggered spread created what is known in economics as a natural experiment. Because Craigslist was narrowly focused on advertising in specific markets, its disruption was limited to local newspapers that relied on classifieds. Looking at more than 1,500 newspapers, the researchers could compare what happened before and after Craigslist arrived, isolating its effects from other factors like the rapid expansion of broadband internet.

The collapse of the classifieds section didn't immediately affect most newspaper readers. "They weren't subscribing in order to look for used cars," Martin notes. The real shock, he says, came from what newspaper executives did next: They axed a lot of the expensive, "prestige" political coverage that classifieds had subsidized. In-depth coverage of local politics wasn't something readers necessarily flocked to, and it cost a lot more to produce than sports or entertainment.

The study from Martin and his co-authors found that following the entry of Craigslist in a market, newspapers reduced mentions of politicians competing in local congressional races by an average of 12%, along with similar declines in coverage of local, state, and national politicians. The reduction in coverage was most pronounced before primary elections.

The Craigslist shock reduced political coverage in mainstream, broadly read publications, which made the public at large less informed. The missing coverage also led to declines in circulation, particularly among readers interested in general news, who tended to be more educated, wealthier, and more politically engaged.

The group of readers who reduced their newspaper reading the most after Craigslist entered their city were those who read the most, Martin says, and people who read newspapers a lot also tend to be more likely to vote. "So when they're less informed and they're less likely to get solid information, they tend to go to extremes," he says. "Because they don't have the information that the extreme candidates are extreme."

Readers who didn't follow politics closely were also affected. "For most people, consuming political media is not something that they do by choice," Martin says. "You may not have been reading the newspaper because you wanted to learn about politics, but the stories about politics were bundled together with the things that you did care about."

Missed connections

When local political coverage disappeared, along with it went an important way for many voters to spot the differences between candidates, particularly unknown candidates running in party primaries. In a world of perfect information, extreme candidates would usually lose, Martin says, because their stances are by definition far from the average voter's. When voters have less information available to ferret out political positions that do not align with their views, they cast more votes for extreme candidates.

In short, Martin explains, "The reduction in staff covering politics made it harder for voters to differentiate between moderates and extremists in partisan primaries, and allowed extreme candidates to do better than they did before."

This, in turn, fueled political polarization. In places where Craigslist disrupted local news coverage, Martin and his colleagues document a decrease in more bipartisan, split-ticket voting along with an increase in the number and electoral performance of more extreme political candidates.

In the end, Craigslist may not have killed many print newspapers by itself. But when combined with the rise of online display advertising on Google and Facebook, it sent many papers into a doom loop of shrinking revenue, circulation, newsrooms, and page counts.

"It took some time after that for readers to recognize that the paper was getting thinner," Martin says. In the end, "Getting rid of this huge source of revenue that was subsidizing all of the investments in reporting made the product worse."