Washington - A new report by The Statistical Assessment Service (STATS) at George Mason University finds that media coverage of payday loans reflects an insufficient understanding of interest rates and other financial data. The study concludes that some news reports of stratospheric interest rates in the payday loan industry do not withstand closer scrutiny. The full study is available here.

From the report:

“Recent coverage of payday loans illustrates a broader tendency by the media to deal with social problems by fixating on a “villain” instead of examining the complex interaction of actors, social problems and trends. In this case, these include such factors as a lack of financial education and the ability to manage household spending and debt, as well as the broader social consequences of a political culture and economic system that emphasize individual opportunity and competition over equality and community.

Every industry contains malefactors who deserve to be exposed. But every industry is also based on incentives that need to be explained, in order to fully understand the relationship between business and consumers. It is here that the media are often sadly lacking, as the case of payday loans illustrates.”

STATS is a nonprofit, nonpartisan research organization affiliated with the George Mason University, where STATS President Dr S. Robert Lichter serves as Professor of Communication and Faculty Scholar at the Center for Health and Risk Communication. STATS’ mission is to improve the quality of scientific and statistical information in public discourse and to act as a resource for journalists and policy makers on scientific issues and controversies. STATS does not accept funding from industry.