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Happiness and Gold Prices

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  • Byström, Hans

Abstract

We use the Twitter-based Hedonometer happiness index to study the link between happiness and gold price changes. We find no significant correlation between the two when we look at correlations across the entire distributions. However, turning to an extreme value theory (EVT) modeling of the tails of the non-normally distributed happiness distribution we find that during particularly depressing days the gold price often goes up. In a sense, gold is found to serve as a happiness-related safe haven, i.e. as a hedge against extreme unhappiness.

Suggested Citation

  • Byström, Hans, 2020. "Happiness and Gold Prices," Finance Research Letters, Elsevier, vol. 35(C).
  • Handle: RePEc:eee:finlet:v:35:y:2020:i:c:s1544612320301781
    DOI: 10.1016/j.frl.2020.101599
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    References listed on IDEAS

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    1. Dirk G. Baur & Brian M. Lucey, 2010. "Is Gold a Hedge or a Safe Haven? An Analysis of Stocks, Bonds and Gold," The Financial Review, Eastern Finance Association, vol. 45(2), pages 217-229, May.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Twitter; happiness; Hedonometer; gold price; tail; extreme value theory;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • G50 - Financial Economics - - Household Finance - - - General
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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