When Emotions Move Markets: Young Economics Enthusiast Yumna Waheed Explores the Emerging Field of Emotionomics

Economics has traditionally been presented as the science of rational choice, with consumers expected to weigh prices, income, utility and risk before making decisions. Yet real-world behaviour is rarely so calculated. What people buy, save, postpone, or how they respond to global events is often shaped by fear, pride, nostalgia, hope, trust, belonging and even anger.

This is the domain Yumna Waheed, a young economist, brings into focus through the emerging concept of Emotionomics.

Broadly, it examines how emotions shape economic behaviour at both individual and societal levels, drawing from behavioural economics, psychology, consumer research, finance and political economy. Its central idea is simple: economic decisions are made not only by numbers, but by people who feel.

A growing body of research supports this perspective. Studies in the Annual Review of Psychology and Nature Human Behaviour have found that emotions can systematically influence decision-making, including attitudes toward risk and delayed rewards. A 2024 study spanning 74 countries and 77,242 participants further found that these effects were particularly pronounced in more economically developed and individualistic societies, making Emotionomics especially relevant to economies such as the United States.

The Consumer Is Emotional

At the consumer level, Emotionomics helps explain why products with similar practical benefits can produce very different buying responses. A product’s value is shaped not only by its function, but also by what it represents. A premium smartphone may signal status or belonging, a familiar cereal may evoke nostalgia, while limited-edition sneakers can create urgency through scarcity and fear of missing out.

Luxury brands sell aspiration, insurance sells reassurance, entertainment sells excitement and escape, while food brands often offer comfort and familiarity alongside taste. Emotion therefore interacts with price, income, and circumstances rather than replacing them.

Recent American data provide a telling example. According to the Federal Reserve's Economic Well-Being of U.S. Households in 2025 report, 58% of adults said changes in prices during the previous year had made their financial situation worse, while more than nine in ten considered price increases a concern. Yet 73% still described themselves as doing okay financially or living comfortably.

The gap between financial circumstances and financial sentiment captures an important dimension of Emotionomics. A household can remain financially stable while feeling economically insecure, potentially changing its spending, saving, or purchasing decisions even before its income changes.

It is this intersection of economic reality and emotional experience that Yumna Waheed seeks to explore through Emotionomics.

Photo Credit: Yumna Waheed

When Individual Emotions Become Macroeconomic

The sheer scale of American household consumption means that millions of individual emotional responses can, collectively, become macroeconomic forces. The U.S. Bureau of Labor Statistics reported average annual expenditures of $78,535 per consumer unit in 2024, with housing and transportation accounting for more than half of household spending.

This scale is central to the perspective Yumna Waheed brings to Emotionomics. If millions of households simultaneously become anxious about inflation, employment or the broader economy, even modest shifts in behaviour can ripple through retailers, manufacturers, investment and employment. A family may postpone buying a car despite having a stable income, while a business owner may delay expansion simply because of growing pessimism about future demand.

The COVID-19 shock offered a striking example. The Cboe VIX, a widely used measure of expected U.S. stock-market volatility, reached a record closing high of 82.69 on March 16, 2020, as fear and uncertainty swept through markets. Consumers stockpiled goods, travel collapsed, precautionary saving rose, and spending patterns shifted almost overnight. Emotion was not merely a response to the crisis, but part of how its economic effects unfolded.

Wars As A Theme Of Emotionomics

Wars offer an even more complex case. Beyond military spending, oil prices, sanctions, and disrupted trade, conflicts stir fear, anger, patriotism, grief, and solidarity, all of which can influence economic behaviour.

A 2024 Pew Research Center survey found that 83% of American adults felt sad about the Israel-Hamas war, while 65% felt angry, 51% felt exhausted, and 37% felt afraid. These emotions do not automatically determine economic choices, but they shape the environment in which those choices are made. Consumers may boycott companies, favour domestic products or increase donations, while investors and governments respond to heightened uncertainty.

Emotionomics examines this connection between emotional responses and economic behaviour, asking how fear, patriotism or insecurity can influence everything from household spending to investment and public support for economic policy.

A More Human Economics

Emotionomics extends beyond advertising, examining how collective emotions shape economic behaviour. Inflation can fuel anxiety, recessions fear, and economic booms optimism, while wars and technological change can bring both insecurity and hope. Social movements can also influence what consumers consider ethical or desirable.

For businesses, income, age and purchasing power alone may not explain consumer choices. Understanding whether a product makes someone feel secure, successful, respected, nostalgic, or connected can be just as important.

For economists and policymakers, the implications are wider. Yumna Waheed’s work points toward a more human understanding of economics, where emotion is not opposed to rationality but interacts with it in shaping how people assess risk, uncertainty and value.

In an age of social media, constant financial news, and geopolitical uncertainty, emotions can spread rapidly across populations. When millions of people respond to fear, optimism, or hope at the same time, those individual reactions can collectively influence markets and the wider economy.

That makes emotion more than a personal feeling. It makes emotion an economic variable and Emotionomics a field worth watching.

About Yumna Waheed

Yumna Waheed is an economics enthusiast, self-development consultant, and founder of AskYumna. Alongside her work in self-development, she pursues independent economic research, with a particular interest in Emotionomics and the ways emotions shape human behaviour and economic decision-making. She can be reached at yumnawaheed3105@gmail.com and Pinterest.