Skip to main content
Part of complete coverage on

The woman using social media to predict the future

STORY HIGHLIGHTS
  • Noreena Hertz is an economist who predicted global financial crisis three years before it hit
  • She believes social media can be a powerful forecasting tool for business and government
  • Hertz correctly predicted who would win talent show "X Factor" by analyzing social media

Leading Women connects you to extraordinary women of our time -- remarkable professionals who have made it to the top in all areas of business, the arts, sport, culture, science and more.

(CNN) -- Social media sites have evolved into the global equivalent of the office watercooler, but could the buzz they generate be analyzed to predict real-world outcomes?

Leading British economist Noreena Hertz thinks so. She believes analyzing the chatter from Twitter and Facebook for example, will become a dominant force in the business of forecasting.

"Over the past few years I have been really quite obsessed with how technology is changing the way that we make sense of the world," she told CNN at Names not Numbers, an idea-sharing and networking conference in the UK.

Read more: Facebook's new Graph Search tool

Economist and author Noreena Hertz
Economist and author Noreena Hertz

Last year, Hertz carried out an experiment to demonstrate the power of social networks as a tool for better understanding human behavior.

"I was really interested to see whether we could make predictions or forecasts by listening in on what people were saying on social media. Because, if we could improve upon the political forecasts; if we could improve upon sales forecasts by listening in on people's chatter on Twitter, Facebook, those sorts of media, that would be a really exciting prospect.," she said.

Facebook's daily 'newspaper'
Do you have Facebook Graph Search yet?
Facebook knows everything about you

Her and a team of computer scientists, sociologists, and economists worked together to develop a method of research that they hoped would enable them to predict the winner of talent contest "The X Factor".

By developing a sophisticated algorithm, the team effectively "listened in" on hundreds of thousands of tweets at once and deduced not just the number and subject of messages but also, for the first time, the sentiment. In doing so they were able to make an accurate guess about who would stay and go each week.

"We were pretty much beating the bookies," she said.

Read more: Facebook 'likes' can reveal your secrets, study finds

Hertz has made a career out of challenging the predictive powers of traditional forecasting models, which she says are far from perfect.

After all, she says, analysts in the Middle East failed to predict the Arab Spring and very few experts saw the financial meltdown coming -- something she did three years before in her book "IOU: The Debt Threat".

An influential economist, Hertz has a knack for prescience that has put her ahead of the curve among her peers.

Her work is all about conducting research that gives raw data some context. It's about understanding the culture, language and psychology of social media users, which, she says, has huge implications for both business and government.

Under her school of her thought, in order for social media marketing to have any real value we need to understand what people's actions really mean. "If somebody tweets 'I like Coca-Cola', does that mean that they're actually going to buy Coca-Cola? One can? Two cans? Three cans? If they retweet someone else's Tweet, does that mean they're going to buy it?"

At the age of 19, Hertz gained her degree at University College London (UCL) and then moved to the U.S. to study for an MBA. In her early twenties, she found herself in St. Petersburg educating Boris Yeltsin's advisers in market economics. Here she gained inspiration for her PhD thesis, "Russian Business Relationships in the Wake of Reform", at the University of Cambridge.

In 2002 she wrote the book "The Silent Takeover," which discussed the migration of power from government to corporations. In it she correctly anticipated that unregulated markets and huge financial institutions would, in the near future, have grave consequences for the rest of the world.

Read more: Arianna Huffington tells women: 'Less stress, more living'

I was really interested to see whether we could make predictions or forecasts by listening in on what people were saying on social media
Noreena Hertz, economist

Today, Hertz is a professor at a number of universities and one of the world's respected thinkers. Her pioneering concepts surrounding social media analytics have the potential to impact government policy, public security and economic growth.

Her work highlights the inadequacy of the majority of data used by governments and corporations as an empirical measure of what we, the people, want.

"Language is too complex for a computer to understand," she said. "It's not going to be able to make sense of what people are saying en masse. We need a new type of discipline that puts together computer scientists and social scientists, who can add context to the situation."

She may, so far, have only predicted the winner of a national singing contest but with the developments made in her "X Factor" experiment, Hertz has presented us with an unprecedented opportunity to foresee the events of the future by simply "listening in on what the world really thinks."

ADVERTISEMENT
Part of complete coverage on
updated 9:44 AM EST, Tue December 23, 2014
CNN set out on a hunt to find the women who excelled in their professions this year and we found some of the most inspiring women of 2014.
updated 9:19 AM EST, Wed December 17, 2014
Jane Fraser is often cited as one of the most powerful women in banking. She tells CNN's Poppy Harlow how women lead differently.
updated 12:43 PM EST, Wed December 3, 2014
Women's-only private members clubs are becoming more popular, offering spaces to work, socialize and relax, albeit with hefty membership fees.
updated 10:15 AM EST, Fri November 28, 2014
A new social network for women claims to be 'troll-proof' and was created by Karen Cahn, former Google, YouTube, Aol executive.
updated 9:18 AM EST, Thu November 27, 2014
She's the daughter of a Beatle and counts Kate Moss among her friends, but she had to create her own mark in the fashion world.
updated 12:43 PM EST, Tue November 18, 2014
Alli Webb always loved having her hair done, so she decided to bring that happy feeling to millions of women worldwide with her business, Drybar.
updated 8:24 AM EST, Mon November 17, 2014
NASA's chief scientist Dr Ellen Stofan wants to land humans on Mars by 2035, but there are some serious challenges to overcome before then.
updated 5:41 AM EST, Tue November 4, 2014
The Design Museum hosts a power dressing exhibition, from Joan of Arc's short tunics, to Joan Collins' eye-gouging shoulder pads.
updated 11:20 AM EDT, Thu October 30, 2014
Opinion piece from architect Zaha Hadid on growing up in a very different Iraq, to close Leading Women's month of STEM coverage.
updated 8:27 AM EDT, Thu October 30, 2014
Leading Women ran an iReport assignment which resulted in some amazing images of girls in STEM from our readers.
updated 7:08 AM EDT, Wed October 29, 2014
Robots can be many things -- knowledgeable, dexterous, strong. But can they ever be genuinely laugh-out-loud hilarious?
updated 2:30 PM EDT, Mon October 27, 2014
Victoria Beckham has come a long way from Posh Spice. She has now been named Britain's top entrepreneur, by magazine Management Today.
ADVERTISEMENT