Do world events swirling all around you – financial, political or cultural – routinely darken or brighten the mood of you and your friends?

Consider the possibility that you’ve got it backwards. Maybe events don’t influence our collective mood as much as our collective mood influences world events.

Many of our attitudes and actions – whether we realize it or not – derive from our mood. If our collective mood ultimately leads many of us to feel and act similarly, the result is broad social trends—for good or ill.

That’s the crux of socionomics, a theory pioneered by American analyst Robert Prechter that flies in the face of conventional wisdom. The traditional view held by most economists, historians, sociologists and political scientists is that social actions and events affect our collective mood. Socionomic theory says it’s the other way around.

Events that make headlines and fill history books are effects rather than causes. These events have to come from somewhere, and they come from people, people who are expressing their feelings.

Here are just three ways the nation’s social mood can have a significant impact on history in the making:

• Recessions and Booms. A conventional view holds that a recession causes business people to contract their activity, and an economic boom spurs them to expand it. But socionomics says that’s backwards. A negative mood makes business people cautious, causing a recession, and a positive mood reinvigorates them, sparking the next expansion.
• Peace and War. Most people, perhaps understandably, believe that a state of peace makes people confident and happy, whereas war makes people fearful and angry. But the socionomic theory holds that when a nation’s people are confident and happy, they are likely to generate peace, and when they are fearful and angry that they are more likely to go to war.
• Scandals. History is filled with scandals involving public figures. A standard views holds that scandals make people outraged. Socionomics would tell you, though, that outraged people are more likely both to expose wrongdoing and to seek out scandals. That’s why scandals are more apt to gain publicity when society is in a bad mood as opposed to a good mood.

So, how can you measure the nation’s mood to have a chance of anticipating social trends?

The answer is the stock market. It is the best meter of social mood.

Speculators register their changes in mood all year long in the stock market.

By looking at the stock market, consumer sentiment and other social-mood indicators, we can make sense of and even anticipate social events and actions across the spectrum of human experience, including in the economy, politics, popular culture and beyond.

Matt Lampert is the director of research at the Socionomics Institute. He is a graduate of the University of Cambridge and has spoken about socionomic theory throughout the US and Europe. 

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