Collaborative post by John Kingston and Chris Potts
Newspaper stories about the financial markets often contain quantitative information that is intepretable only by experts. The headline screams "Dow Up 200!", but what does that mean? In some contexts (say, apartment rentals), 200 is a lot. In others (e.g., houses prices), it is hardly anything at all. Similiarly, what is a 3% change like? Sometimes we're asked to shrug off 3% differences as irrelevant (think of polling data). For the markets, though, most of us have the sense that 3% is a big deal.
The headlines do contain some information that all of us have intuitions about: the verbs and other predicates that describe the change. We know that rise says that the change was upwards, and we can intuitively juxtapose it with soar, which suggests really dramatic upward change. Conversely, fall and plummet describe motion in the downward direction, with the second implying much worse news than the first.
So much for our linguistic intuitions. Do they square with the way newspaper headline writers use these predicates in describing financial markets? This is much less clear. As part of our Data Rich Humanities project, sponsored by UMass Amherst CHFA, we have been exploring this question using the collection of 23,327 NY Times financial headlines described in this earlier post.
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