Excellent editorial from Lawrence O’-Donnell. Make sure to watch the whole segment till the end.
Web 2.0 Summit 2010: Vinod Khosla, “-Innovation vs. Punditry”-
Extrapolating the Past vs Inventing the Future:
Mr. Kristof, if you want to keep yourself accountable and track the success of your predictions in the long run and in real-time, why not simply participate in a prediction market such as NewsFutures?
You could suggest that particular stocks be listed in relation to particular new stories and their possible outcomes. Then, as you invest in particular outcomes, your prediction portfolio would either grow or shrink, providing us all with an objective measure of your foresight. You could feature on your blog a widget displaying in real-time the “-net worth”- of your various predictions.
Other advantages of this approach would include:
– Forcing a detailed specification of possible outcomes-
– Having you compete directly (bet against) the general public-
– Measuring how much your columns can influence price movements for various predictions-
– Leading by example to show other pundits how it’-s done.
There are various types of prediction markets out there, so you can pick the venue where you’-d feel most comfortable:
– Play-money only, like NewsFutures– [or HubDub ]
– Real betting (illegal) like Intrade-
– Charity-driven, like Bet2give.
If the idea intrigues you, please contact me at firstname.lastname@example.org and we can get you started right away!
Readers, do click on the link (which will bring you to the New York Times), and do click on “-Recommended”- under Emile’-s comment —-so that his pitch for the prediction markets will be more visible to all the people reading the comments there. Thanks. Appreciated.
HubDub has investigated and graded the 2008 predictions of some notorious pundits.
One of those pundits didn’-t take it graciously —-look down for the comments.
at least parity with the poll
I agree with the above.
their superiority over the pundits
What documented evidence do you have about that, mister the cocky entrepreneurial Scotsman?
John Tierney linked to that Huffington Post that listed the pundits’- predictions about the total number of electoral votes that each presidential candidate would take. But I disagree with that way of predicting the electoral college and assessing these predictions. With this completely flawed method, if you are damn wrong on a state and damn wrong (in the opposite way) about another state that has the exact same number of electoral votes, then you are a bright genius worth the Nobel prize of forecasting. Gimme a break. Enough with that voodoo way of assessing predictions about the electoral college. Do the assessment state by state.
InTrade and HubDub got lucky that their 2 mistakes (so to speak, in a non-probabilistic way) on Missouri and Indiana (both with 11 electoral votes) canceled themselves perfectly. IT WAS PURE LUCK. If their 2 mistakes had been made in the same direction (say, betting on Obama with the outcome going eventually to McCain), and/or their 2 mistakes had been done on 2 very dissimilar states (say, one with 6 electoral votes and the other one with 27 electoral votes), then we would have had reporters and bloggers bashing the prediction markets for the whole month of November.
Overall, the TV show is based on a good concept (trying to predict future headlines), and I’-m sure it will be a success in the end.
However, one big mistake Max is doing is to have female journalists. Sorry to say that, but if you are in the business of selling subjective predictions, you need to have credible predictors, with loud voice, charisma, and definitive attitude. Most women in journalism don’-t display those qualities.
Max, fire the journalists and put real pundits on your TV show.
Previous blog posts by Chris F. Masse:
- The letter David Pennock will never send out —well, we hope.
- Monitor the web traffic of TradeSports.com, InTrade.com, BetFair.com, Betdaq.com, NewsFutures.com, HubDub.com, etc. —thanks to Google Trends.
- Here’s the way to promote innovation for entry-order and analysis software packages —separate the 2 functions.
- Ugly things happened before BetFair was invented
- Tiny API delay for non-UK customers of BetFair —since all international BetFair bettors, traders and gamblers are now served from Malta, not from London.
- CLOCK IS RUNNING FAST: 17 days to go, if we want to counter AEI’s push for not-for-profit prediction exchanges.
- In the for-profit vs not-for-profit debate, our prediction market luminaries, doctored by Bob, are on the wrong side of the issue.
Why were the political prediction markets so wrong about Barak Obama and Hillary Clinton in New Hampshire?
…-asks Slate’-s Daniel Gross —-via Mister Usability (Alex Kirtland), who needs to go and get his own gravatar.
So, I’-ve been watching the action in one of the political futures markets this evening, Intrade. And the action in this prediction market has reinforced my opinion that these are less futures markets than immediate-past markets. The price movement tends to respond to conventional wisdom and polling data- it doesn’-t lead them.
Throughout the day and into the early evening, while polls were still open, Democratic investors, mimicking the post-Iowa c.w. and polls, believed Obama was highly likely to be the Democratic nominee. The Obama contract was trading in the lows 70s, meaning investors believed he had a 70 percent chance of being the nominee, while Hillary Clinton contracts were in the 20s. […] At 6 p.m., this market had written Hillary Clinton’-s entire presidential campaign off. At 9:30 p.m., it was calling a dead heat. What caused investors to change their minds so drastically in the space of a couple of hours? A few data points that went against the day’-s prevailing conventional wisdom and polls. […]
See also Niall O’-Connor’-s assessment:
I am looking forward to the post New Hampshire Caucus, when all you prediction market advocates crawl out from under your stones. For the record at one point the market on Intrade and Betfair was suggesting that Obama had a 95% probability of winning the caucas- whilst Intrade had him at 77% to win the nomination.A case perhaps of both the foolery of crowds and, the market biting back.
New Hampshire will go down as the Black Wednesday of prediction markets and unless there is now objective transparent debate (as opposed to the usual biased sabre rattling) – prediction markets will be dead in the water.
My answer to Dan Gross’- legitimate question and to Niall O’-Connor’-s snarky comment:
- Prediction markets are forecasting tools of convenience that feed on advanced indicators. When those advanced indicators are wrong, the prediction markets are wrong.
- If you prefer the polls or the pundits, your call —-but polls and pundits were also wrong, this time, right? Required reading for mister Niall O’-Connor: “-New Hampshire’-s Polling Fiasco”- + “-Analysis: pundits eat crow“-.
- The ultimate forecasting tool would be a way to reverse our psychological arrow of time —-so as to remember the future instead of the past. Only science-fiction writers and some imbecile ( ) believe in that.
- The prediction market approach is to stick with the markets, on the long term. Take their successes. Take their failures. Unlike Donald Luskin and Markos Moulitsas, Chris Masse will not turn against the prediction markets when they fail punctually. What counts is the long series.
- My first point should be included in the prediction markets approach definition, in my view, but others (like economist Michael Giberson) might have different opinions.
- With respect to my first point, I bet that the prediction markets will never replace the polls as the forecasting tool of choice for political analysts —-on that particular point (but not on a myriad of others), I break away from Justin Wolfers’- irrational exuberance and I side with Emile Servan-Schreiber of NewsFutures (my preferred play-money prediction exchange). Prediction market reporting will have a function, indeed (as suggests Justin Wolfers), but not the dominant function.
- Going forward, prediction market journalism should emphasize relative accuracy (as opposed to absolute accuracy) —-that is, comparing prediction markets with polls and pundits, which is what Robin Hanson has said from day one. Our good friend Niall O’-Connor has difficulty to compute that, apparently. He should eat more fish.
“In a few years, we may regard the second half of the 20th century as the aberration in which the press used polls rather than markets to track political races,” Justin Wolfers, a business professor at the University of Pennsylvania’s Wharton School, wrote in an e-mail message. “And in the 21st century, we may return to the habits of the early 20th century, reporting on political races through the lens of prediction markets rather than polls.”
1) The traders themselves are the first to look at the polls to inform their trades. So the polls are here to stay.
2) Our recent experience in Western Europe seems to indicate that the superior accuracy of markets over polls when predicting elections may be a U.S. artifact that isn’t so easily reproducible elsewhere. I’ve discussed this with Forrest Nelson of IEM [Iowa Electronic Markets], and apparently, ever since the Truman-Dewey polling debacle of 1948, U.S. pollsters have adopted a policy of reporting mostly raw numbers rather than projections based on sophisticated secret formulas, so they can’t be accused of manipulating opinion. However, raw numbers are notoriously unreliable when based on small samples, and Western European pollsters never report them, preferring instead to publish projections based on historically-informed statistical formulas. What we’ve observed in France and Holland is that it it’s very hard to beat the accuracy of such projections.
[I don’t make mine Emile Servan-Schreiber’s second point, but that’s a minor.]
InTrade’-s expired prediction markets:
The Hillary Clinton event derivative was expired to 100.
The John McCain event derivative was expired to 100.
The Barack Obama event derivative was expired to 100.
The Mike Huckabee event derivative was expired to 100.
[A more complete prediction market reporting should have included expired contracts from NewsFutures and BetFair. Sorry for that. Note that InTrade-TradeSports is the only exchange to offer a “closed contacts” section.]
NEXT: Prediction Markets 101 + Who did best in explaining the prediction markets to the lynching crowd? + After the New Hampshire fiasco, 16 people came to defend the prediction markets, so far. + The prediction markets deserve a fair trial. + Prediction Markets = the greatest time-saving invention of this century