N°25-35: The American Dream Narrative and Business Creation

Does the rendition of the American Dream narrative in local U.S. news media spur business creation? To answer this, we assess articles from the most recent decade and use generative AI to identify underlying narrative structures. We find that a one standard deviation increase in the frequency of American Dream articles and the prevalence of the “rags-to-riches” narrative within them is associated with a subsequent three percent increase in county level establishment creation. We exploit broader trends in news media consolidation to reach a causal interpretation. Our findings imply that media narratives can have a sizeable impact on economic outcomes.