Using Social Media Networks for Measuring Consumer Confidence: Problems, Issues and Prospects

Abstract

This research examines the confluence of consumers’ use of social media to share information with the ever-present need for innovative research that yields insight into consumers’ economic decisions. Social media networks have become ubiquitous in the new millennium. These networks, including, among others: Facebook, Twitter, Blog, and Reddit, are brimming with conversations on an expansive array of topics between people, private and public organizations, governments and global institutions. Preliminary findings from initial research confirms the existence of online conversations and posts related to matters of personal finance and consumers’ economic outlook. Meanwhile, the Consumer Confidence Index (CCI) continues to make headline news. The issue of consumer confidence (or sentiment) in anticipating future economic activity generates significant interest from major players in the news media industry, who scrutinize its every detail and report its implications for key players in the economy. Though the CCI originated in the United States in 1946, variants of the survey are now used to track and measure consumer confidence in nations worldwide. In light of the fact that the CCI is a quantified representation of consumer sentiments, it is possible that the level of confidence consumers have in the economy could be deduced by tracking the sentiments or opinions they express in social media posts. Systematic study of these posts could then be transformed into insights that could improve the accuracy of an index like the CCI. Herein lies the focus of the current research—to analyze the attributes of data from social media posts, in order to assess their capacity to generate insights that are novel and/or complementary to traditional CCI methods. The link between data gained from social media and the survey-based CCI is perhaps not an obvious one. But our research will use a data extraction tool called NetBase Insight Workbench to mine data from the social media networks and then apply natural language processing to analyze the social media content. Also, KH Coder software will be used to perform a set of statistical analyses on samples of social media posts to examine the co-occurrence and clustering of words. The findings will be used to expose the strengths and weaknesses of the data and to assess the validity and cohesion of the NetBase data extraction tool and its suitability for future research. In conclusion, our research findings support the analysis of opinions expressed in social media posts as a complement to traditional survey-based CCI approaches. Our findings also identified a key weakness with regards to the degree of ‘noisiness’ of the data. Although this could be attributed to the ‘modeling’ error of the data mining tool, there is room for improvement in the area of association—of discerning the context and intention of posts in online conversations.