How Data Science Predicted Brexit

The world, and financial markets in particular, were stunned by Britain's vote to exit the EU. The markets were quite confident that Britain would stay in the EU. The S&P 500 rose sharply towards the end of the trading day before the Brexit vote, which some analysts claimed as a vote by investors against the Brexit. In the meanwhile, a unique model that we developed using media sentiment data made the opposite prediction and expected a sharp decline in markets that we saw overnight. During my graduate work at Stanford University, I learned how modern machine learning algorithms can be used to identify complex and deep patterns in noisy datasets – patterns that may be very difficult to detect with less sophisticated algorithms or human intuition.