Last week one of the suggestions to maintain a healthy mind and body was to get outside in the sunshine.
With this being the first day of Spring.... at least in this part of the world... I thought it would be a good idea to have some actual facts to back up this theory. Of course I don't need any excuses to go outside and enjoy the sunshine, but, in case you feel the need here we go!!
Howard and Hoffman (1984) had 24 college students keep track of their mood (by filling out a mood questionnaire) over 11 consecutive days. They found a significant effect on mood correlated with the weather, especially with regards to humidity (a component of weather not always measured):
Humidity, temperature, and hours of sunshine had the greatest effect on mood. High levels of humidity lowered scores on concentration while increasing reports of sleepiness. Rising temperatures lowered anxiety and skepticism mood scores. [...]Now you know it's not just you that feels better because it's sunny !! Now get this!!! Fine weather acutally affects the stock market.. .. makes one glad that there is not a TSE or NYSE located at the North or South Pole.!!
The number of hours of sunshine was found to predict optimism scores significantly. As the number of hours of sunshine increased, optimism scores also increased. [...]
Mood scores on the depression and anxiety scales were not predicted by any weather variable.
David Hirshleifer, Ph.D., of the Ohio State University's Fisher College of Business, and study coauthor Tyler Shumway, Ph.D., assistant professor of finance at the University of Michigan, found that when the sun shone on 26 leading global stock exchanges over a period of 15 years, market returns shot up.
"Sunshine is strongly positively correlated with daily stock returns," says Hirshleifer, who revealed that unseasonably sunny days in otherwise overcast seasons add up to an annualized excess return of 24.8 percent. In other words, stocks traded on sunny days yielded nearly 25 percent more money than those traded during cloudy periods. If transaction costs are assumed to be minor, it is possible to trade profitably on the weather.