Twitter to predict world economy
After studying for 10 months, Twitter messages, a team of scientists from Indiana University (USA) has concluded that the messages of the popular microblogging servicecan be used to predict the movements of the Dow Jones stock index.
Specifically, the researchers analyzed the emotional content of 9.7 million messages posted by 2.7 million users of Twitter, using the Google algorithm 'Profile of Mood States' (GPOMS), and took into account six parameters: quietness, alertness, safety, vitality, kindness and happiness.
In this research they found that changes in a particular parameter, tranquility, were correlated with movements in stock prices. While the accuracy of the predictions of the closing values of the Dow Jones based on this parameter was 87.6 percent, with an advance of 2 to 6 days.
how does it works?
As you know, people's mood are an important fact to determine the market movement. For example if it's hot outside people might want to buy more icecream, or light clothes, because the weather is just for it, so people will get things in order to satisfy not only their needs but to suit their tastes. So that is why mood states studied in this collective research made it to predict the world economy.
The algorithm measures some standard moods among people, somo of these are:
This measurement is targeted to 18+ age individuals who have reached a Education level of 8th grade at least, and it monitors the mood from about 15-20 minutes.
So basically it includes the individuals who have reached a maturity level and a certain level of education, in other words, people who can purchace stuff.
So the next time you hear that twitter is not worth to make any money, you will have an intresting argument on how you can predict what will be the next "big thing".