Setting is a crucial element of Gothic fiction such as Edgar Allan Poe's "The Fall of the House of Usher" and Charlotte Perkins Gilman's "The Yellow Wallpaper". Much of the atmosphere of horror in both stories is developed through the use of setting. In particular, the external settings in Gothic fiction are not intended as realistic, but rather as reflections of the characters' psychological states. Some critics refer to this technique as the "pathetic fallacy", because in reality there is no causal connection between a character's feelings and the external world. For example, just because a character is feeling unhappy, that does not mean it is more likely to rain. On the other hand, if an author wants to show us that the character is miserable, describing a gray, cold, rainy day does set the mood for an unhappy story.
In Gothic writers such as Poe and Gilman, we find something that goes beyond details of the external world being chosen to illuminate the moods of the characters. Instead, we have unreliable narrators, whose preternatural sensitivity to the external world is a symptom of mental illness. Rather than seeing the world as it really is, they project their own troubled mental states upon the world. In "The Yellow Wallpaper", the main element of the setting is the wallpaper in the room. When the woman is first confined in the room, she merely considers the wallpaper ugly. As her mental state deteriorates, her descriptions of the wallpaper become more exaggerated and more unrealistic. She starts imagining that there is a woman trapped in the paper:
Through watching so much at night, when it changes so, I have finally found out. The front pattern DOES move—and no wonder! The woman behind shakes it! Sometimes I think there are a great many women behind, and sometimes only one, and she crawls around fast, and her crawling shakes it all over.
The setting becomes a metaphor for the way the narrator herself feels trapped in the room, which itself reflects her sense that she is trapped in her marriage and her role as a woman in a patriarchal society. Similarly, in Edgar Allan Poe's "The Fall of the House of Usher", the sense of impending horror is set up by a description of the weather at the very beginning of the story:
DURING the whole of a dull, dark, and soundless day in the autumn of the year, when the clouds hung oppressively low in the heavens, I had been passing alone, on horseback, through a singularly dreary tract of country, and at length found myself, as the shades of the evening drew on, within view of the melancholy House of Usher.... . I looked upon the scene before me—upon the mere house, and the simple landscape features of the domain—upon the bleak walls—upon the vacant eye-like windows—upon a few rank sedges—and upon a few white trunks of decayed trees—with an utter depression of soul ...
The eerie quality of the landscape and the "vacant eye-like" windows of the house reflects the hypersensitive psyche of the narrator and also signals us that we are entering a realm of horror, in which the foreboding images reflect both a narrative voice with a morbid imagination and a plot arc that will lead to some form of horrific ending.