A Different Perspective on “Yield”

For the last several years, it’s felt like almost every conversation in the investment world has revolved around one topic – yield. Dividend strategies…high yield bonds…REITs…income…yield! So I was intrigued when I saw that the word yield is actually appearing less and less. In fact, as interest rates have decreased over the past 30 years, so has the relative frequency of the word yield.

Yield, with the meaning of “income from a financial transaction” appears to have entered the English language around 1877, according to the Oxford English Dictionary. Yield is a much, much older word than that, but the financial meaning only seems to have appeared in the late 1800s. The OED attributes yield’s first use in this sense to Robert Giffen in his Stock Exchange Securities: An Essay on the General Causes of Fluctuations in Their Price. So that made me curious. I wanted to check the relative frequency of yield over time since the 1870s, which took me to Google’s Ngram project. The Ngram Viewer is part of Google Books, and it searches the 5.2 million books that Google has digitized and allows you to graph the relative frequency that words appear.

Below, you’ll see that I’ve graphed the 10-year U.S. Treasury rate (in red) along with the relative frequency of the word yield in English (in blue). I limited the Ngram search to only bring in instances of yield being used as a noun; that way we’d get closer to instances of the financial sense of the word. Now while the scales for the two sets of data are drastically different, it’s the trend over time that interested me.

What you’ll see is that from around 1877, yield actually reduces in frequency until about the turn of the century, so this new meaning obviously didn’t catch on like wildfire. After 1900 though, use of yield explodes until the mid 1920s. There’s a dip in usage centered around the stock market collapse in 1929, then continues upward, even as nominal Treasury rates sink through the period of World War II. Use of yield peaks in the early 1950s, early 1960s, and late 1970s, coinciding with a tremendous rise in Treasury rates. Then, around 1980, actual yields begin to drop and use of the word yield does too. As you can see, the relative frequency of yield is actually lower in 2008 (the latest year of Google Books data) than it was around 1877. Oddly, nominal 10-year Treasury rates in 2008 are also below their levels of 1877.


Yield Chart


So where did that yield go? I’m willing to believe that some of the buildup in frequency from the 1920s through the 1960s is actually attributable to yield’s meaning related to farming (i.e. crop yield). To check, I scanned usage of words like crop and corn over that period and found that they rose in frequency from the ’20s and then dropped precipitously in the ’60s; however, yield continues climbing in frequency after use of those words declines.

The factor behind the decline may be Google’s source material. They’re looking at books, not magazines or newspapers or websites. So it’s entirely possible that while use of yield in actual books has declined, usage has transferred over to non-book material during that time. Though the Law of Large Numbers would tell us that with that many books, we’d likely be getting a statistical sample that would approximate all English writing pretty well.

Either way, we’ll probably have to wait several more years for Google Books to expand their data set before we can see if this downward trend continued after the financial crisis of 2008. In the meantime, the search for actual yield and the word yield continues. And if you’re writing a book, throw the word yield in there a few times. It can’t hurt.


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