4pm, Neils Bohr Common Room, Schuster Building. All welcome!
Twitter mood predicts the stock market.
Johan Bollen; Huina Mao; and Xiao-Jun Zeng
(authors made equal contributions.)
Paper is at: http://arxiv.org/abs/1010.3003
Behavioral economics tells us that emotions can profoundly affect individual
behavior and decision-making. Does this also apply to societies at large, i.e.,
can societies experience mood states that affect their collective decision
making? By extension is the public mood correlated or even predictive of
economic indicators? Here we investigate whether measurements of collective
mood states derived from large-scale Twitter feeds are correlated to the value
of the Dow Jones Industrial Average (DJIA) over time. We analyze the text
content of daily Twitter feeds by two mood tracking tools, namely OpinionFinder
that measures positive vs. negative mood and Google-Profile of Mood States
(GPOMS) that measures mood in terms of 6 dimensions (Calm, Alert, Sure, Vital,
Kind, and Happy). We cross-validate the resulting mood time series by comparing
their ability to detect the public's response to the presidential election and
Thanksgiving day in 2008. A Granger causality analysis and a Self-Organizing
Fuzzy Neural Network are then used to investigate the hypothesis that public
mood states, as measured by the OpinionFinder and GPOMS mood time series, are
predictive of changes in DJIA closing values. Our results indicate that the
accuracy of DJIA predictions can be significantly improved by the inclusion of
specific public mood dimensions but not others. We find an accuracy of 87.6% in
predicting the daily up and down changes in the closing values of the DJIA and
a reduction of the Mean Average Percentage Error by more than 6%.
2nd Edition of "Simulating Social Complexity" is out - The second edition of the handbook *Simulating Social Complexity*, edited by *Bruce Edmonds* and *Ruth Meyer*, has now been published by Springer and is av...