Widespread worry and the stock market

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

Our emotional state influences our choices. Research on how it happens usually comes from the lab. We know relatively little about how real world emotions affect real world settings, like financial markets. Here, we demonstrate that estimating emotions from weblogs provides novel information about future stock market prices. That is, it provides information not already apparent from market data. Specifically, we estimate anxiety, worry and fear from a dataset of over 20 million posts made on the site Live Journal. Using a Granger-causal framework, we find that increases in expressions of anxiety, evidenced by computationally-identified linguistic features, predict downward pressure on the S&P 500 index. We also present a confirmation of this result via Monte Carlo simulation. The findings show how the mood of millions in a large online community, even one that primarily discusses daily life, can anticipate changes in a seemingly unrelated system. Beyond this, the results suggest new ways to gauge public opinion and predict its impact.

Original languageEnglish (US)
Title of host publicationICWSM 2010 - Proceedings of the 4th International AAAI Conference on Weblogs and Social Media
Pages58-65
Number of pages8
StatePublished - Dec 1 2010
Event4th International AAAI Conference on Weblogs and Social Media, ICWSM 2010 - Washington, DC, United States
Duration: May 23 2010May 26 2010

Publication series

NameICWSM 2010 - Proceedings of the 4th International AAAI Conference on Weblogs and Social Media

Other

Other4th International AAAI Conference on Weblogs and Social Media, ICWSM 2010
CountryUnited States
CityWashington, DC
Period5/23/105/26/10

ASJC Scopus subject areas

  • Computer Networks and Communications

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