A version of this article previously appeared on Medium.
Imagine the perfect long-term relationship. A partner that knows everything about you, keeps you informed on what’s going on in the world, and last but not least, always wants to know how you’re feeling.
When I’m recluse, Facebook is that for me. It’s always asking me, how are you feeling my dear? To which I reply, “Well honey, I’m feeling pretty damn lucky – listening to Daft Punk.”
Enter Facebook Status Updates
Have you ever wondered how tremendously valuable Facebook Mood Status Updates could be? How this data could powerfully be aggregated for us to predict how some decisions would be received in the future?
When the tragic Boston Bombings occurred earlier this year, we predictably witnessed trending hashtags like #prayforboston and #bostonstrong on Twitter. According to global tweet mood tracker Hedonometer, the Boston Bombing was officially Twitter’s ‘saddest day’ marked by a notable replacement of positive phrases for the words‘sad,’ ‘victim,’ and ‘tragedy.’
No doubt the catastrophe resulted in the aforementioned emotions but consider the brief economic downturn that may have occurred as a result. I remember scrolling through my Twitter feed, and I couldn’t help becoming more upset about the incident. I remember wanting to investigate to truly understand what happened. I recall relying on my go-to journalists to clarify the many questions that were bugging me.
Unsurprisingly, I was not browsing for shoes on Zappos, nor identifying which movie I wanted to see next on Fandango. Rather, I was focused on how I could be of service to anyone I knew in Boston that may have been impacted by the tragedy.
Thus, my emotions inadvertently affected my propensity to spendshort-term, and this obviously had an effect on many other aspects of my life, as well.
Emotions are powerfully influential in affective forecasting, which has marvelous applications in economics, psychology, and healthcare. Consider the Human Emotional Theory (HUEMO), that is thought to influence stock prices and cause shifts in entire stock markets.
According to the Cycle of Market Emotions, upturns in the market are characterized by the following emotions: optimism, excitement, thrill, and euphoria. On the contrary, downturns are characterized by: anxiety, denial, desperation, and panic.
It probably wouldn’t surprise you then that a wave of positive emotions would increase the average person’s propensity to spend or invest, while negative emotions lead to the contrary.
Just think about the holiday season. People are so exhilarated to spend that many go into debt to pay for presents. Though it would be best for us to completely detach our emotions, it’s an innate inclination for many of us.
Jarod Kitnz put it quite well:
“I made a graph of my emotions, a chart, and when I looked it over I was amazed to notice that the day Agatha broke up with me looked identical to the stock market crash of 1929. I thought I was the Irving Fisher of love.”
Okay, I get it, but how could this manipulate the future?
Because when you know exactly how everyone is feeling, you can probably time the market pretty damn well.
Why wouldn’t Google release a new feature when everyone (on a macro level) is generally positive? Why wouldn’t a company announce a new job opportunity when many others are boasting about their recent offerings of employment? Why wouldn’t Facebook completely change their layout when everyone is boasting about how much they love it (wait, never mind — they already do…)?
Anyways, they will and they should. Businesses can be able to more fully understand their consumers and how their decisions may be perceived in the future.
If you’d prefer to reduce your impulse to act on such conditions,investor Charlie Munger advocates we must negate our necessity to act on many of these feelings when making financial choices. He has said,
“A lot of people with high IQs are terrible investors because they’ve got terrible temperaments. You need to keep raw irrational emotion under control.”
Either way, it’s important to consider the potential broader applications of all this worthy information. Remember that this data is extremely valuable because it can examine populations at their most specific level. Just like targets for Facebook Advertisements can filtered by gender, age, education, employment, and interests, conclusions shouldn’t be drawn without considering the poster’s demographics.
But I suppose if we blindly assumed an economic upturn unknowingly due to millions of ecstatic status updates by prepubescent teens raving about a new Justin Bieber single, we’re quickly bound to get ourselves into another Great Recession.