Stories and Sentiment in State and Local Government Finance

• Author: Justin Marlowe
• Date: 01 September 2021
• Published date: 01 September 2021
• DOI: 10.1177/0160323X211049239
• Subject Matter: Field Notes

Stories and Sentiment in State

and Local Government Finance

Justin Marlowe

Abstract

Budgets and f‌inancial statements convey essential information about revenues, expenditures, assets,

and liabilities. But perhaps more important, they also convey positivity, negativity, fairness, uncer-

tainty, and other social sentiments. This essay examines what we know, and what we need to

know, about how state and local governments communicate f‌inancial sentiment. The main conclu-

sion is that they do convey clear f‌inancial sentiments through traditional f‌inancial reporting methods

and through new channels like social media. Moreover, those sentiments shift predictably in

response to broader economic trends and policy priorities, and can shape how investors and

other stakeholders view a government’sf‌inances. This raises several practical questions about

how states and localities can measure f‌inancial sentiment, and many normative questions about

whether and how they ought to attempt to manage it. The discussion also includes a brief demon-

stration of how to extract f‌inancial sentiment from state and local Twitter activity.

Keywords

Public f‌inance, governmental accounting, municipal bonds, twitter, XBRL, social media, local

government budgeting

Introduction

When the New York Stock Exchange opened

on January 25, 2021, shares of Game Stop,

Inc. sold for $75/share. When the market

closed two days later, that same stock had sky-

rocketed to $350/share. This spectacular 366

percent increase seemed odd for a business—

selling console-based video games at shopping

malls—that seemed stuck in the past.

“Game Stop Mania”upended the f‌inancial

world. Analysts could not explain the stock’s

meteoric rise. Hedge funds and private equity

f‌irms lost billions on bets that the stock would

decline. Regulators like the Securities and

Exchange Commission could do little to explain

what had happened, or to calm investor concerns

that someone was manipulating the market.

1

In fact, Game Stop was not a f‌inancial

anomaly or market perturbation. It was a

social rebellion. A group of savvy inf‌luencers

proclaimed that buying it was a chance to

force big losses on Wall Street f‌inanciers who

had bet against it. Thousands of individual

investors poured in. Game Stop quickly

became the quintessential “meme stock”—a

security whose price is driven more by trends

University of Chicago, Harris School of Public Policy,

Chicago, Illinois, United States

Corresponding Author:

Justin Marlowe, University of Chicago College, Keller

Center 3061, Chicago, Illinois 60637-5418, United States.

Email: jmarlowe@uchicago.edu

Field Notes

State and Local Government Review

2021, Vol. 53(3) 248-259

© The Author(s) 2021

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DOI: 10.1177/0160323X211049239

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