On Sunday, May 31, as the protests around George Floyd and civil unrest took hold, we had our saddest day ever according to something called the Twitter Hedonometer, an index that has been measuring our daily “happiness” since 2008.
Developed by UVM researchers, the Hedonometer looks at a large random sample of English language tweets or Twitter messages, parses the words, gives them a happiness score and then rates the day’s happiness accordingly. Thus, the Fourth of July, Mother’s Day and Christmas show up as some of our happiest days because there are a lot of words like “fireworks,” “family,” “merry” or “love.” In contrast, our worst days come after natural disasters or horrific tragedies like mass shootings or terrorist attacks.
Now clearly, Twitter is not real life. Not everyone tweets, and there is no definitive measure of happiness – or even agreement on what happiness is. Still, with roughly 500 million Twitter messages a day, the Hedonometer does tell us something across populations — and what it is saying now, at least to me, is that we are really sad. The May 31 nadir is pretty awful. Plus, it comes not too long after the second all-time low on March 12. That was when the coronavirus really hit home for people – the NBA suspended its season, and actor Tom Hanks announced that both he and his wife had coronavirus.
Still, it’s also important to note that sentiment can change quickly. The creators of the Hedonometer know that sentiment changes over the course of the day: The happiest tweets come in the morning, and then profanity starts increasing as the day progresses in what they call “the Daily Unraveling of the Human Mind” (Danforth, Dodds, Doraiswamy on weforum.org). There’s also a weekly cycle where Saturday is the happiest day and Mondays and Tuesdays are low points.
Beyond the weekly cycle, sentiment can sometimes recover remarkably quickly even after tragedies. People move on and get distracted. Other times, the Hedonometer stays surprisingly stable as the bad news keeps coming. Even after the March 12 low, the Hedonometer showed rapid recovery at least through mid-May. If you’re positively inclined, you might say that reinforces the concept of hedonic adaptation – the idea that people are pretty good at adjusting after a shocking setback. Or you might say that the news simply got better over time.
You may be wondering if broad mood gauges like this can tell us anything useful about the stock market, and of course the answer is no. Nothing in life or investment is ever so simple. But since so much of investment is about psychology and personalities, I find it terribly interesting that the market has been on a tear since March even though we’ve been unhappier than ever. We’re in a world where, more than ever, two possible but opposing outcomes both can make perfect sense at once (bullish, bearish, or a little of both?). We could be on the cusp of some really major changes, or not – – and so we’re having some big emotional swings.
But heightened emotional states are not good for decision-making. When we’re happy, we tend to underestimate risks. When we’re very sad or very worried, paralysis sets in. The best quality decisions probably happen when we’re a little sad or a little worried because that’s when systematic and solutions- oriented thinking kicks in. And that’s something to keep in mind – because there probably are more emotional swings ahead.