The Economics of Weather
Weather, Mood and Markets
What research says about sunny weather and stock market returns, weather's effect on decisions, and why these effects are small but real.
Weather may affect mood and decisions.
Sunshine and stocks
A study by Hirshleifer and Shumway (2003) found stock returns were higher on sunny mornings in many cities.
Other effects
- Hot weather is linked with more aggression and conflict in research.
- Rain may affect exam performance and job interviews.
Small effects
These effects are small and hard to exploit after trading costs.
Behavioural economics
They show people aren’t perfectly rational.
Caution
Some findings don’t replicate well.
The sunny market
Studies suggest markets tend to do slightly better on sunny days, but not enough to trade on.
Thinking weather controls markets
Effects are small.
Key takeaways
- Sunny weather linked to higher returns.
- Heat linked to aggression.
- Effects are small.
- Some findings don't replicate.
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