Tag Archives: Twitter

11.10.2012 | Can Stock Markets Predict Elections?

No one seems to be talking about what really might have led to the Obama win.

The stock market.

The basic reasoning is that people connect their “social mood” to the incumbent and social mood directly relates to how the stock market is performing. Some think the mood precedes the market and others say the opposite. Whichever the sequence, though, there seems to be a correlation between rising stock markets and incumbent reelection. For President Obama, during his first term, the Dow had a compound annual gain of 8.8% as of October 24.

Sources and Resources: Just before the election, Floyd Norris wrote about the Dow and elections and presented the following chart. You also might want to read this econlife post about the correlation between Tweets and stock markets. (Researchers were surprised that they could use Tweets to predict market changes rather than the opposite.) Finally, I did see the term “social mood” in this paper but was not familiar with its academic source.

Posted by: adminEcon
Tags: Barack Obama, Bill Clinton, Dow Industrial Average, election indicators, election predictions, floyd norris, Jimmy Carter, Mitt Romney, social mood, stock market predictions, Tweets, Twitter
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09.26.2011 | Tweet Rights

Does “Nutcracker Tweet” bird seed have the right to Tweet?
Is it okay to name your birdhouse firm “Tweet Tweet Home?”
Can your app say Tweet?

It all depends on the US Patent and Trademark Office.

Twitter wants the tweet trademark. It is suing Twittad to get it. Here is the story at techcrunch.

The Economic Lesson

Whether looking at Louboutin’s red soles, music copyrights, or a tweet trademark, business firms like exclusivity. Think of a competitive market structure continuum in which perfect competition is at the far left and monopoly is at the other end. Moving firms away from a perfectly competitive market structure where products are identical or similar, exclusivity takes them closer to oligopoly and monopoly. As firms move to the right on the scale, they gain greater control over their identity, pricing, and how they will communicate with consumers.

An Economic Question: The US Patent and Trademark Office told shoe firm Louboutin that it had no exclusive right to its red soles while Tweet can be trademarked. Explain why you think the decisions differ.

Posted by: adminEcon
Tags: competitive market structures, Louboutin, trademarks, tweet, Twitter
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08.29.2011 | “Tweetquakes”

Sometimes Tweets travel faster than seismic waves. And then, what happens?

In this wonderful webcomic from April 2010, an earthquake strikes, people Tweet, and within seconds, the news beats the temblor’s spread. Do people run for safety? No. They send new Tweets!

For the August 23, 2011 East Coast quake, 2 Harvard bloggers proved that truth does copy a cartoon. Calling it a tweetquake, they demonstrated that the 40,000+ Tweets that were sent within 1 minute of the quake radiated outward faster than the quake itself. You can see the Tweet spread here.

And here is how people were Tweeting about Hurricane Irene.

The Economic Lesson

Described in “Thinking Like an Economist,” (Lecture 6) from the Teaching Company, the economics of ignorance involves deciding how much information is optimal. Only when the benefit of an extra piece of information outweighs the cost of being ignorant should we be willing to add to our store of knowledge. While initially new data can be valuable, eventually, diminishing marginal utility starts to kick in and that extra piece of information is no longer worth our time or thought.

Even for a Tweet, then, we are always thinking at the margin, choosing a little more or less.

An Economic Question: When researching a topic, when does diminishing marginal utility set in?

Posted by: adminEcon
Tags: "tweetquakes", diminishing marginal utility, information, marginal benefit, marginal cost, Tweets, Twitter
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10.25.2010 | Stocks and Tweets

An Indiana University researcher thinks he has confirmed that mood and stock market movement correlate. The results, though, were not what he expected.

1) Originally, he and his students thought that they would discover a positive relationship between the direction of the Dow and Twitter sentiment. However, the connection was not sad tweets on down days and happy ones after the Dow went up. It was “calm vs. anxious.”

2) The big surprise was that their original prediction was backwards. Looking at millions of tweets for emotional indicators, they discovered that the tweets came first. A slew of calm tweets meant the Dow would probably rise. Anxious tweets and it fell. Their accuracy? An 86.7% success rate.

Can Twitter be used to predict the Dow?

The Economic Lesson

The Dow Industrial Average is an index number. Computed through a formula that uses the stock prices of 30 large companies, it provides an indication of the direction of financial markets for a specific time.

Stock price movement is one component of the Index of Leading Indicators that is compiled by the Conference Board. As a “leading indicator” it helps predict where economic activity is heading.

Is Twitter sentiment a leading indicator of a leading indicator? You might find an answer in A Random Walk Down Wall Street by Princeton professor Burton Malkiel.

Posted by: adminEcon
Tags: Dow Industrial Average, Twitter
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