Using Google Trends to Analyse Economic Sentiment Via Search Engine Behaviour

Gord Hotchkiss has an interseting and wide-ranging article about emotions, search engine technology and economic sentiment on searchengineland.com - "Human Hardware: Risk vs Reward, Expressed through Search". Hotchkiss talks about how our moods drive our actions.

"If we’re in a good mood and looking to acquire, we will be considering purchases. Consideration requires information, which will often be sought through a search engine... There’s the consideration that happens when my washing machine dies and I decide to buy a new one this weekend. But then there’s a much more subtle, much more emotional consideration that is prevalent when the nation’s mood is running high."

Hotchkiss also asks - what if our mood turns to anxiety about the future? "We still search, but we search for different things. We search for information needed to help us weather the storm. Or, we search out of a desperate desire need to know just how bad things are." To illustrate, Hotchkiss presents the following Google Trend graph which shows the relative search volume and news coverage volume of "house plans" (blue line) and "foreclosures" (red line) in America over the last few years:


The use of the Google Trends software to analyse economic sentiment via search engine behaviour (over the economic cycle) is a further demonstration of how useful the software is. The novelty of doing research with Google Trends was discussed on the blog before (here).