Note: a hat tip to a Villanova student for sending me the information that led to this blog post…
A recent study looked at the average happiness of the songs played over a week in a country and compared it with what happened in the country’s stock markets that week. They found that more-positive listening choices were significantly correlated with stock price gains. It’s a robust finding based on 500 billion streams of 58,000 songs.
The study was part of a broader look at what drives the market: fundamentals (e.g., interest rates, unemployment figures) or emotions. The efficient-markets hypothesis holds that stock returns should reflect only fundamentals. According to Alex Edmans of London Business School, one of the study’s co-authors, it’s the irrelevance of music that makes the study interesting. In a rational model, factors that don’t affect economic fundamentals—such as investor sentiment/mood—should have no impact on stock returns. This research is showing that they do.
If you’re curious as to how the researchers measured the happiness level of a song, they relied on a team at Spotify called the Echo Nest. This team, building on research started at MIT, consisted of human experts who scored about 5,000 songs and assigned a positivity score between 0 and 1. This data was then used to create a machine-learning algorithm that can be applied to every song. The algorithm doesn’t take into account lyrics but uses the sound, the beat, and so on.
The researchers measured a country’s mood by multiplying the rating for a song by the number of streams of that song and then added up all those multiplied values. They then divided that total by the total number of streams of all songs to arrive at a weighted average. As two examples, the United States averaged out at about 0.46—not too positive. Mexico was 0.63. Of course, these scores changed over time.
These scores were then compared to what happened in the stock market, and as noted above, more-positive listening choices were significantly correlated with stock price gains.
So that is why I ask you: next time you listen to music, whether it is on Spotify or Apple Music or YouTube, please listen to happy music. This will lead to gains in the stock market, which will help my retirement fund grow, which will enable me to retire sooner rather than later.
If you’re curious what the happiest song is, it turns out to be “September” by Earth, Wind & Fire, apparently. “Happy” by Pharrell Williams is up there too. The most negative song is “Legion Inoculant” by Tool. The Adele song “Hello” was also down there.
So I’ll get things started with the song September. Just play it, then share it, and before you know it, 800 million people will have listened to it, and the stock market will explode.
Your retirement account will thank you, and I will thank you…
Source: Harvard Business Review
*image from USA Today
Maybe people are playing happy music in the week the stock market is rising because stocks are rising. I have noticed that stocks go up when I sell them. So if GoFundMe stakes me to stocks, I will sell them after my benefactors load up on them. Everybody wins.
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I have a better plan. You tell me when you’ve sold stocks and what stocks they are, and then I’ll buy them.
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count me in…
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And then we’ll count our money.
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sounds good to me…
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I thought of the same thing, but the researchers actually studied the data to see which way the cause effect seemed to be and it seemed it was happy music led to higher market returns, and not the other way.
and please give me a day’s notice when you’re about to sell…
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My thoughts exactly.
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the stock market is just a wild guessing game…
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A down market means my 401k is buying in at a bargain. So, don’t get bothered much.
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as long as it starts going up at some point…
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It always does. And if it doesn’t, we have bigger problems than my little retirement account to worry about.
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good point!
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FYI…Chuck Berry Special to re-air on many PBS TV stations on February 1st.
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thanks for that info – that sounds like happy music!
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The stock market is similar to a broken clock. Both are guaranteed to be correct at some point. The market is right once on the way up and once on the way down. Thanks for September. It provided a nice lift. Happy by Pharrell Williams is a good one too. 😎😀
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that’s why I invest for the long term. it’s hard to predict the day to day movements. and yes, Happy is another good song…
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Borden’s stock tips—more Earth Wind and Fire and Pharrell Williams. Sounds good to me. This is one of my favorite clips surrounding the song, Happy. https://www.youtube.com/watch?v=0gx6sNYUJRQ
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thanks for that video – it had me in tears…
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This seems to be a spurious correlation at best, but I am all for happy music!
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sounds like it was probably a fun study to do…
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i’ve certainly done my part to boost the economy and continue to. i saw what happened when i listened to the ‘romeo and juliet’ soundtrack, and don’t want that kind of fallout on my shoulders again.
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yes, please don’t play romeo and juliet again. or if you do, just give me a day’s notice…
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So the stock market is falling because of me listening to Adele? Oops!
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yes, so please stop. I wonder where Abba ranks…
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If they rank low too then your stocks are in trouble. LOL!
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🙂 but so would you…
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I remain to be convinced of the validity of this study. They may have looked at 58k songs but there are millions more that could have changed the ratings. I’m also surprised at the top song, as I’d have thought “Happy” would have beaten everything. Maybe they didn’t play their respondents the WOTE version? I’ve never heard of the negative song or the band that plays it, but have to give them credit for their honesty in choosing their name…
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Happy did show up pretty high on the rankings, but the algorithm does not factor in the lyrics, so having the word happy in the song did nothing to boost its positivity score.
and I agree with sentiment regarding the worst song, which I have never heard of either.
and everything from WOTE makes me happy 🙂
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That seems to me like a fairly big failure on the part of the study. Such an obvious factor to include. And if everyone watched a WOTE video every day stocks would hit record highs…
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the reason for not using lyrics, according to the researchers, is that they can sometimes be ambiguous. I would say the same thing for the sound and the beat. In fact, the researchers seem to contradict themselves with the following logic:
“Take a song like “Pumped Up Kicks.” It’s about a mass shooting, but it’s quite happy sounding. In contrast, “Perfect” by Ed Sheeran has positive lyrics but is actually downbeat. Lyrics are also sometimes ambiguous, which is another reason not to factor them in.”
so are they saying that a song about a mass shooting would be rated as a positive song because it had a good beat?!
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Rather calls into question the whole basis of their study, doesn’t it. I said I had my doubts about it, and that seems to confirm them. Maybe they can replicate the study in the Congo – their music seems happy enough 😊
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it does seem odd not to use the lyrics…
and yes, that Congo music had an upbeat sound to it. I just don’t know what kind of stock market they have there…
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It devalues it, to my way of thinking.
Maybe you could set your students a task on finding out about the stock market in Congo. All those unsuspecting ‘volunteers’ to help with your research…
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now there’s an idea! 🙂
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Looking forward to the blog post describing how it went 😂
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there’s probably a good chance of it 🙂
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😂
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“Please listen to happy music. This will lead to gains in the stock market” I think you may have made an unintended correlation there Jim.
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well isn’t that what this research is saying?
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I love happy music! If my stocks gain even better!
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icing on the cake!
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September is my favorite happy song! It gets stuck in my head so often. Too bad I don’t own any stocks or I would surely be rich by now.
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it is a great song. and thanks for playing it so often! 🙂
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Hello is on my playlist… Good thing I don’t have any shares 🙃
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I hope you cut back on playing it – for the sake of the global financial markets 🙂
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Bring on the happy songs!
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yes – who doesn’t want to listen to happy songs?!
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Absolutely!
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Who doesn’t love a happy song..as for the markets they go up they go down …I look forward to the follow up post hehe 🙂
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the follow-up where I’m a billionaire because everyone starts playing happy music right after I invest my life savings in the stock market?
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