Over the years there has been a lot of talk in this community about how prediction markets could be “-socially valuable”-. The discussion has often focused on the value of the information and/or predictions that the markets could generate, especially in a political context. Election-based decision markets a la Hanson are thus being held as the highest form of “-socially valuable”- prediction markets, and our best bullet aimed at a possible legalization of real-money markets.
However, just in time for Super Tuesday, I’-ve finally stumbled onto a totally different, and to my mind much more compelling societal benefit of political prediction markets (the real-money kind, like Intrade or Bet2Give). It’-s based on sound science, but has nothing to do with information, prediction accuracy, or the usual economics/decision-support suspects:
Participating in political prediction markets may be good for your health by virtue of reducing the killer stress caused by aggravating political outcomes over which you have very little control as a voter. In essence, you can hedge against despair, and thus reduce your political “-learned helplessness”-. I present this idea more completely, and the science behind it, in NewsFutures’- blog.
The interesting thing is that it should be relatively easy to test, say as a senior psychology research project, but the consequences of a positive result would be huge. Who could argue against the legalization of something that saves lives?
So let the word go forth on this day that if there’-s someone out there who would like to run such an experiment, the industry would gladly help out, either through the PMIA, or through individual stake holders like NewsFutures. And if you’-re in an economics department, please reach out across the social sciences aisle to your psychology colleagues and spread the word! This, by the way, is especially aimed at Justin Wolfers who happens to share the U. Penn campus with Martin Seligman, the founder of Positive Psychology himself, and the inventor of “-learned helplessness”-.