Widespread Worry and the Stock Market

Our emotional state influences our choices. Research on how it happens usually comes from the lab. We know rela tively little about how real world emotions affect real world settings, like financial markets. Here, we demonstrate that estimating emotions from weblogs provides novel informa tion about future stock market prices. That is, it provides information not already apparent from market data. Specifi cally, we estimate anxiety, worry and fear from a dataset of over 20 million posts made on the site LiveJournal. Using a Granger causal framework, we find that increases in expres sions 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 pri marily discusses daily life, can anticipate changes in a seem ingly unrelated system. Beyond this, the results suggest new ways to gauge public opinion and predict its impact.