The study of words is called lexicology—not to be confused with phraseology, philology, syntax, morphology, lexicography or semantics. How do lexicologists create new words? Actually, they don’t—think how ridiculous it would be if a deranged lexicologist had the power and desire to create hundreds of new words? Rather they observe the way English is used and choose words from their findings.

The English lexicon has mutated over time from a variety of parent languages, primarily Latin, French and Old English. These languages stretch even farther back to a language family called Proto-Indo-European (or PIE). The most significant transformation of English happened in the eleventh century. When the Normans invaded England in the 1066, they brought their words with them. For centuries, wealthier aristocrats spoke Old Norman (or Old French) and the peasantry spoke English (Middle English to be precise). Inevitably, the languages mixed, and English acquired the French words that now constitute about 30% of the English vocabulary.

With global colonization in the early 1500s, English continued to amalgamate with other languages. Individual words such as futon, pecan, coyote and vodka were imported directly from foreign languages like Japanese and Algonquin. Calques are another interesting example of word importation. They are borrowed phrases that are directly translated from another language. For example, “flea market” comes directly from the French marché aux puces which literally means “market of fleas.”

Few words are made up whole cloth, but some neologisms have become accepted words. Neologism itself was a neologism. First used in French from the Greek roots neo- (new) and logos (word), neologism appeared in English in 1772. Authors (most notably Shakespeare) combine and invent words for their own uses. The Bard was the first to use more than a thousand words including attest, gnarled, howl, pageantry, and savagery. (He also coined numerous phrases that continue to be used daily: a sorry sight, a sea change, good riddance, lie low, short shrift, and wear your heart on your sleeve, among many others.) Read more.

See: Dictionary.com