Reply
 
Thread Tools Display Modes
  #1  
Old 02-20-2020, 08:28 PM
Thing Fish is offline
Guest
 
Join Date: Sep 2001
Location: Chicago (NL)
Posts: 3,903

Why do people pay attention to betting markets?


Frequently people on this board will cite data from online betting markets as indicative of how the primary race is going, in the same way that one would cite polls.

Nate Silver says that these markets are worthless and don't provide useful information; he doesn't use them at all in his forecasting model. Based on some of the cites I've seen, that seems spot on; I recall seeing that these markets gave Bernie Sanders a ridiculous 70% chance of winning the Iowa caucuses, and prior to last night's debate had Bloomberg at an absurdly high 30% to win the nomination. It seems logically that these markets shouldn't be very reflective of reality, since they're basically like polls that only reach people who spend a lot of time online.

So is there any scientific argument to be made that these markets are worth paying attention to? Is there evidence that the markets have consistently been more accurate predictors than polls?
  #2  
Old 02-20-2020, 11:15 PM
Heffalump and Roo is offline
Guest
 
Join Date: Nov 2006
Posts: 4,384
Quote:
Originally Posted by Thing Fish View Post
Nate Silver says that these markets are worthless and don't provide useful information
Can I get a cite for this? This seems like an incredible thing for him to say. I did a quick search on election markets and Nate Silver and got this article he wrote in 2012.

Oct. 23: The Virtues and Vices of Election Prediction Markets

Quote:
The probabilistic forecasts issued by FiveThirtyEight have been quite close to Intrade and those at other trading and betting markets over the course of the election.
. . .
The general question of whether FiveThirtyEight ought to be better than prediction and betting markets is an interesting one. I am far from an efficient-market hypothesis purist, but markets are tough to beat in most circumstances. Furthermore, the FiveThirtyEight forecasts are public information, and bettors can use our forecasts along with those of our competitors to calibrate their estimates of the outcomes.

A 2009 paper by David Rothschild found that FiveThirtyEight’s forecasts were somewhat better than Intrade’s over the course of the 2008 presidential election cycle. Mr. Rothschild wrote, however, that Intrade’s forecasts would have outperformed FiveThirtyEight’s had they been corrected to adjust for the market’s tendency to overrate the chances of the trailing candidate (what is known as a favorite-long shot bias).
. . .
So is FiveThirtyEight better than Intrade? I don’t know about that as a general proposition.

But I’d be happy to bet on FiveThirtyEight relative to the price that Intrade offered on Mr. Obama on Tuesday, which was not characteristic of rational market behavior.
At the time, 538 was leaning more toward Romney than the betting markets. Silver surmised that the betting markets might be more predictive because they can take his models into account before betting. Silver says that election markets are tough to beat.

Polling models are based on old data. The polls have to be taken earlier. But they're more systematic and more comprehensive. Betting markets have a lot of noise, but they're in real time. Some of the noise includes people betting long or short, big players that skew the numbers, the herd mentality, etc.

They don't necessarily serve the same function. For instance, on the night of the debate, the betting markets had an immediate reaction to the Bloomberg debate. Nate Silver refused [timestamped] to give a forecast on what would happen to Bloomberg's polling despite his insistence that Bloomberg had a bad debate--"I thought he was pretty terrible.. . . He sounds like he hasn't talked to a normal American in 10 years." Despite that, he wouldn't give much of a prediction on how the voting public would react. He gave a range from the debate doesn't affect Bloomberg at all to it was campaign ending for him. But he wouldn't give odds on which was more likely.

The betting markets are forecasting in real time. Nate Silver doesn't do that. If he was a prognosticator, he's not very good at it. In this video in Jan. 2019, he's asked to pick who the Dem nominee will be. He picked Kamala Harris. In Oct. 2019, he then picked Bernie Sanders but he wasn't too enthused about him.
  #3  
Old 02-20-2020, 11:58 PM
Thing Fish is offline
Guest
 
Join Date: Sep 2001
Location: Chicago (NL)
Posts: 3,903
Well, you've found a more comprehensive accounting of his thinking. I was thinking of a comment he made in a recent chat that "betting markets are stupid". My general impression is that his opinion has evolved more in that direction since 2012; IIRC, most of the comments I've seen about markets on 538 recently are of a similar tone.

But yes, polls are more systematic and more comprehensive. It takes about a week to collect and analyze the data. So unless there's less than a week until the election, why wouldn't you just wait for the polls? What use is it to have "real time" information of dubious accuracy?

Last edited by Thing Fish; 02-20-2020 at 11:58 PM.
  #4  
Old 02-21-2020, 12:53 AM
Heffalump and Roo is offline
Guest
 
Join Date: Nov 2006
Posts: 4,384
Quote:
Originally Posted by Thing Fish View Post
Well, you've found a more comprehensive accounting of his thinking. I was thinking of a comment he made in a recent chat that "betting markets are stupid". My general impression is that his opinion has evolved more in that direction since 2012; IIRC, most of the comments I've seen about markets on 538 recently are of a similar tone.
I'm still interested in seeing a source for this. I searched for your quote with Nate Silver and didn't find anything. I did find this video where he validates the betting markets' take on Elizabeth Warren back in June 2019. He wasn't denigrating them. He was validating them. At the time, he said that if he were to put money down, he'd put it on Elizabeth Warren over Bernie Sanders, which is what the betting markets were showing.

Nate Silver: 3 things political betting markets tell us about Elizabeth Warren's 2020 chances

Quote:
Originally Posted by Thing Fish View Post
But yes, polls are more systematic and more comprehensive. It takes about a week to collect and analyze the data. So unless there's less than a week until the election, why wouldn't you just wait for the polls? What use is it to have "real time" information of dubious accuracy?
It's another source of data. I haven't seen anyone else say they were of dubious accuracy, including Nate Silver. All forecasts have some bias in them that doesn't make them 100% accurate. That report in my last post shows that the accuracy of select betting markets, filtering for bias was more accurate than Silvers' model. They were quicker to predict Obama's win than Silvers at the time.
  #5  
Old 02-21-2020, 01:04 AM
Thing Fish is offline
Guest
 
Join Date: Sep 2001
Location: Chicago (NL)
Posts: 3,903
From the recent Nevada Caucus live blog:

Quote:
Nate Silver
9:49 PM

Prediction markets are stupid, but Bloomberg’s odds have crashed from 28.2 percent to 21.5 over at BetFair over the course of this debate, for what it’s worth.
That may be an offhand comment not fully reflective of this thoughts on the subject. But I'm pretty sure Nate would argue that his model is significantly better now than it was in 2008.
  #6  
Old 02-21-2020, 01:41 AM
Heffalump and Roo is offline
Guest
 
Join Date: Nov 2006
Posts: 4,384
Quote:
Originally Posted by Thing Fish View Post
From the recent Nevada Caucus live blog:

That may be an offhand comment not fully reflective of this thoughts on the subject. But I'm pretty sure Nate would argue that his model is significantly better now than it was in 2008.
Thanks for the link. In context, the rest of the staff were discussing Bloomberg's debate performance and what it meant. No one seemed to know what to make of it in terms of how voters would react. Nate obviously went looking to see what other people were thinking and some evidence of that is in the betting markets. Nate seemed to want to make sure that everyone knew this wasn't some kind of definitive statement. But he must have thought that it wasn't completely useless or he wouldn't have taken the time to look it up.

As to whether his model is better, we won't know until the polls come out and he puts them in his model and then wait for another election. Even he wanted to get a better idea of the mood of the electorate before then.
  #7  
Old 02-21-2020, 08:58 AM
septimus's Avatar
septimus is offline
Guest
 
Join Date: Dec 2009
Location: the Land of Smiles
Posts: 21,137
Another question might be: Why are people enamored of pollings? In late July 2011, the Zogby polled nationwide and found that Michelle Bachmann was first among Republican voters, with Herman Cain 2nd! A month earlier, Sarah Palin was first in a Reuters poll. As late as October, IBOPE Zogby had Cain polling at 45%, way ahead of Romney at 21%.

And of course prediction markets may take into consideration future possibilities (e.g. health relapse) unreflected in pollee opinions. Also, isn't the idolization of Nate Silver rather exaggerated? He's good at statistical modeling, but so are others. If he deserved the pedestal Dopers place him on, I think he'd be working for Renaissance Tech!

Anyway, OP, in light of post #2, do you wish to revise parts of your #1?
  #8  
Old 02-21-2020, 09:12 AM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
Quote:
Originally Posted by septimus View Post
Another question might be: Why are people enamored of pollings?
Polls have their flaws but they are directly measuring what people are thinking. Betting markets measure what some people think other people are thinking -- based on polls and their gut. Why wouldn't I trust polls more?
  #9  
Old 02-21-2020, 09:27 AM
Pleonast's Avatar
Pleonast is offline
Charter Member
 
Join Date: Aug 1999
Location: Los 'Kamala'ngeles
Posts: 7,468
Why do people pay attention to betting markets?
Because that's where the money is.

My uneducated guess would be a betting market "stock" is about as predictive as a poll with the same number of participants. Because a market is a type of poll, after all. Of course, questionnaire polls aren't that predictive in general--only carefully controlled scientific questionnaires have any utility.

Markets are self-selecting polls, which degrades their usefulness, but participants are risking real money to try to be accurate. I'm not sure if where that puts them for predictiveness, but if Nate Silver doesn't throw them into his mix, I'm guessing low utility.
  #10  
Old 02-21-2020, 10:34 AM
Fotheringay-Phipps is offline
Guest
 
Join Date: Mar 2009
Posts: 12,089
You can't weigh betting markets against polls. The markets themselves reflect the polls and are not independent sources of information.

But polls are not be-all-and-end-all. Even a poll-driven guy like Nate Silver needs to make adjustments to accommodate for things like weighing the disparate results of different polls, the "house effect" of certain polls, the reliability of individual pollsters, and so on. In addition, there are other factors like national polls vs state polls. Further, polls reflect the current state of the race and are also impacted by name recognition in the early stages, and it would be a mistake to rely on them too much in the face of other factors which suggest future movement in the polls. Which is why even modelers like Silver incorporate things like fundraising and endorsements in their modeling.

Bottom line is that the prediction of elections is much much more complex than simply looking at a poll. So there's a lot of room for someone to come in and boil it all down to a number - "as a result of all these various complex factors, we think it all adds up to an X% likelihood of such-and-such happening". Guys like Silver et al are doing that. Betting markets are even more meta than that, as they incorporate the market's assessment of the value of Silver's modeling (and those of others).

The betting markets are a lot like the stock market in this regard. It goes without saying that the betting markets can be wrong, just like it also goes without saying that the stock market could be pricing such-and-such stock wrong. What both the betting and stock markets are is the collective wisdom of people with money on the line as to the likelihood of various events, based on all publically available information. That collective wisdom could well be wrong, but it's absolutely worth paying attention to.
  #11  
Old 02-21-2020, 01:25 PM
septimus's Avatar
septimus is offline
Guest
 
Join Date: Dec 2009
Location: the Land of Smiles
Posts: 21,137
Those who think the betting markets are poor predictors have the opportunity to "put their money where their mouth is," by locating mispricings and making favorable bets.

I don't blame you for not indulging in such speculations — though you're passing up easy money if you really think the markets are way off! — but many others will bet; this tends to move the prices toward rational estimates.
  #12  
Old 02-21-2020, 01:53 PM
Thing Fish is offline
Guest
 
Join Date: Sep 2001
Location: Chicago (NL)
Posts: 3,903
Quote:
Originally Posted by septimus View Post
Another question might be: Why are people enamored of pollings? In late July 2011, the Zogby polled nationwide and found that Michelle Bachmann was first among Republican voters, with Herman Cain 2nd! A month earlier, Sarah Palin was first in a Reuters poll. As late as October, IBOPE Zogby had Cain polling at 45%, way ahead of Romney at 21%.

And of course prediction markets may take into consideration future possibilities (e.g. health relapse) unreflected in pollee opinions. Also, isn't the idolization of Nate Silver rather exaggerated? He's good at statistical modeling, but so are others. If he deserved the pedestal Dopers place him on, I think he'd be working for Renaissance Tech!

Anyway, OP, in light of post #2, do you wish to revise parts of your #1?
Why do you have a problem with those poll results? There's no reason to think they weren't accurate at the time, and nobody with any sense would have looked at any of those polls and thought the current leader was a lock to win, given how obviously volatile the race was. Betting markets offer a picture of how some people think the race will unfold in the future, but it's a self-selected group of people who aren't representative of the general population and don't have any special expertise or information. If you have evidence that more than a small portion of the people participating in these markets are serious students of political science, that would change my opinion.
  #13  
Old 02-21-2020, 01:57 PM
Thing Fish is offline
Guest
 
Join Date: Sep 2001
Location: Chicago (NL)
Posts: 3,903
Quote:
Originally Posted by Fotheringay-Phipps View Post
You can't weigh betting markets against polls. The markets themselves reflect the polls and are not independent sources of information.

But polls are not be-all-and-end-all. Even a poll-driven guy like Nate Silver needs to make adjustments to accommodate for things like weighing the disparate results of different polls, the "house effect" of certain polls, the reliability of individual pollsters, and so on. In addition, there are other factors like national polls vs state polls. Further, polls reflect the current state of the race and are also impacted by name recognition in the early stages, and it would be a mistake to rely on them too much in the face of other factors which suggest future movement in the polls. Which is why even modelers like Silver incorporate things like fundraising and endorsements in their modeling.

Bottom line is that the prediction of elections is much much more complex than simply looking at a poll. So there's a lot of room for someone to come in and boil it all down to a number - "as a result of all these various complex factors, we think it all adds up to an X% likelihood of such-and-such happening". Guys like Silver et al are doing that. Betting markets are even more meta than that, as they incorporate the market's assessment of the value of Silver's modeling (and those of others).

The betting markets are a lot like the stock market in this regard. It goes without saying that the betting markets can be wrong, just like it also goes without saying that the stock market could be pricing such-and-such stock wrong. What both the betting and stock markets are is the collective wisdom of people with money on the line as to the likelihood of various events, based on all publically available information. That collective wisdom could well be wrong, but it's absolutely worth paying attention to.
Yes, you are correct that Silver uses many different factors, not just raw polling data, in making his models. And as Pleonast pointed out, I'm sure he'd be using betting market data if he felt it would add any value, but he doesn't.
  #14  
Old 02-21-2020, 02:13 PM
Fotheringay-Phipps is offline
Guest
 
Join Date: Mar 2009
Posts: 12,089
Quote:
Originally Posted by Thing Fish View Post
And as Pleonast pointed out, I'm sure he'd be using betting market data if he felt it would add any value, but he doesn't.
If he would use it, it would be somewhat circular, since the betting markets themselves reflect his modeling (and that of others).

More generally, the whole point of Silver's modeling is to provide an independent data-driven analysis. The betting markets are along the lines of "expert opinions", which Silver does not include. Incorporating betting markets into his modeling would be analogous to including a survey of pundits. That's not what he's trying to do. This isn't to imply that pundit opinion has no value; only that that's not what Silver is doing.
  #15  
Old 02-21-2020, 02:19 PM
Thing Fish is offline
Guest
 
Join Date: Sep 2001
Location: Chicago (NL)
Posts: 3,903
But polling itself is circular; voters' decisions on who to support depend enormously on who the polls tell them has a chance of winning. ITSM that market prices are much more akin to objective numerical data like polls and demographic profiles than they are to punditry, so I don't think he would have a philosophical objection to including them.
  #16  
Old 02-21-2020, 02:31 PM
Fotheringay-Phipps is offline
Guest
 
Join Date: Mar 2009
Posts: 12,089
Quote:
Originally Posted by Thing Fish View Post
But polling itself is circular; voters' decisions on who to support depend enormously on who the polls tell them has a chance of winning.
That's not circular, assuming they intend to vote for who they say. If you're saying that people are lying to pollsters, that's something else, but if they're not then it makes no difference what influences their decision.
Quote:
ITSM that market prices are much more akin to objective numerical data like polls and demographic profiles than they are to punditry [...]
I disagree.
  #17  
Old 02-21-2020, 04:28 PM
Thing Fish is offline
Guest
 
Join Date: Sep 2001
Location: Chicago (NL)
Posts: 3,903
OK. But both market prices and polls take the opinions of a group of people and translate them into a numerical value. Unlike polls, markets are assessing predicted outcomes rather than preferred outcomes. But like polls and unlike punditry, markets tell us nothing about the reasons people hold the opinions they do. They might influence strategic decisions, but they're not likely (or intended) to change anyone's opinion about who should win.
  #18  
Old 02-21-2020, 08:35 PM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
Quote:
Originally Posted by Thing Fish View Post
I recall seeing that these markets gave Bernie Sanders a ridiculous 70% chance of winning the Iowa caucuses, and prior to last night's debate had Bloomberg at an absurdly high 30% to win the nomination.
How much money did you put on Sanders 'No' in Iowa? How much money did you put on Bloomberg 'No' for the dem nomination?

Here's my Super Tuesday PredictIt tracker. Which contests does PredictIt have wrong? Or can you only tell where PredictIt is wrong after the fact?

If polls and Nate Silver are so clearly and obviously superior to PredictIt, it shouldn't be difficult for you demonstrate that.
  #19  
Old 02-21-2020, 08:50 PM
Andy L is online now
Member
 
Join Date: Oct 2000
Posts: 7,295
Nate talks about the value of betting on one's beliefs in his book "The Signal and the Noise" - he may have serious doubts about the "instant response" of a betting market over the course of a debate, but he probably doesn't dismiss them entirely.
  #20  
Old 02-21-2020, 11:31 PM
septimus's Avatar
septimus is offline
Guest
 
Join Date: Dec 2009
Location: the Land of Smiles
Posts: 21,137
If you think Exxon stock is undervalued, you buy it but are faced with a danger: Maybe you're correct that Exxon is undervalued but a year later the market still hasn't figured that out; your money's been tied up for a year to no avail.

Bets on the Democratic nomination do not have that problem. This summer all the contracts will be worth either $100 or Zero.

If you think Betfair overvalues Bloomberg ... Bet against him! If you think Betfair undervalues Biden ... Bet on him! If you think Betfair misevaluates these odds but would rather talk about it on a message board than lay money on the line, then ... ?

And — key point — whatever your reason for not placing a bet, others are not so constrained. Good opportunities would attract smart money. Google "Efficient Market Hypothesis."

Quote:
Originally Posted by Thing Fish View Post
Why do you have a problem with those poll results? There's no reason to think they weren't accurate at the time, and nobody with any sense would have looked at any of those polls and thought the current leader was a lock to win, given how obviously volatile the race was....
I didn't have a "problem." YOU wrote that polling results were more informative of chances than betting markets; I presented data to disprove that point; now you're AGREEING with the thrust of MY argument: polls, by themselves, are not predictors. If you've come around 180 degrees and now agree with me, say so!!

You claim that Nate Silver, the anointed "Babe Ruth of Forecasting", doesn't like prediction markets and get 100% refuted by post #2.

I don't really know whether Silver's numbers are more or less accurate than Betfair's; one reason I quote the latter is they are more accessible to me. (Where are Silver's numbers? In another thread someone referenced Silver's simulations of convention scenarios, but didn't post a link: What is that URL?)
  #21  
Old 02-22-2020, 12:41 AM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
Quote:
Originally Posted by Lance Turbo View Post
How much money did you put on Sanders 'No' in Iowa? How much money did you put on Bloomberg 'No' for the dem nomination?

Here's my Super Tuesday PredictIt tracker. Which contests does PredictIt have wrong? Or can you only tell where PredictIt is wrong after the fact?

If polls and Nate Silver are so clearly and obviously superior to PredictIt, it shouldn't be difficult for you demonstrate that.
It's unclear to me: How many delegates does your tracker say, for instance, Biden is going to get in Alabama?

Last edited by CarnalK; 02-22-2020 at 12:44 AM.
  #22  
Old 02-22-2020, 09:05 AM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
Quote:
Originally Posted by CarnalK View Post
It's unclear to me: How many delegates does your tracker say, for instance, Biden is going to get in Alabama?
That's not what it's tracking.

It's tracking the PredictIt market for Alabama, which is not a market that is is concerned with delegate counts.
  #23  
Old 02-22-2020, 09:08 AM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
Well, then I guess I just demonstrated why polls are clearly and obviously superior to PredictIt,
  #24  
Old 02-22-2020, 09:23 AM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
Quote:
Originally Posted by CarnalK View Post
Well, then I guess I just demonstrated why polls are clearly and obviously superior to PredictIt,
Not really.

A market concerned with predicting winners has predictive value when you are asking the question, "Who will win?"

A market concerned with predicting delegates has predictive value when you are asking the question, "How many delegates?"

It's pretty silly to blame one market for not being a different market altogether.
  #25  
Old 02-22-2020, 01:15 PM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
Here's a question: How many delegates do Alabama primary polls say, for instance, Biden is going to get in Alabama?

As of right now, there are two. One from July 2019 and one from March 2019.

Do the polls or prediction markets give us a clearer picture of what to expect from Alabama on March 3?
  #26  
Old 02-22-2020, 02:44 PM
Corry El is offline
Guest
 
Join Date: Jan 2013
Posts: 4,256
Quote:
Originally Posted by Thing Fish View Post

Nate Silver says that these markets are worthless and don't provide useful information; he doesn't use them at all in his forecasting model.
...
So is there any scientific argument to be made that these markets are worth paying attention to? Is there evidence that the markets have consistently been more accurate predictors than polls?
Another post gave evidence questioning whether Silver actually thinks that. And if he did think it, I believe he'd just be wrong. He is not infallible.

The 'scientific' argument, really just common sense argument is simple. People have less reason to make bets thoughtlessly, which would cost them real money, as compared to answering poll questions thoughtlessly, which costs them nothing. Also the key weakness of polls, especially ones far in advance of elections, is difficulty correlating the answers of the sample of people who respond to the poll to the actual electorate, in terms of 'likely voter'. Polls far from elections don't always even try to do that, but are of 'registered voters'. That doesn't directly enter into betting odds. The people willing to bet tend to automatically be ones with relatively more knowledge and concern about the election.

Obviously a % bet on a winner tells you nothing directly about the number of delegates a candidate is likely to amass. So if it's Silver saying a projection of delegate numbers is not based on bets which aren't on delegate numbers, 'duh' on that one I think.

The big potential weakness in betting odds is that not a really large amount of money is bet in the US. The reason being basically tax treatment. A betting win is taxable income, a loss is not deductible against other trading gains. So it's basically a mug's game compared to 'betting' on for example the direction of the stock market, a currency's value etc where a win is taxable but a loss is deductible against other gains. You have to be good at an unlikely level to win out after tax where gains are taxable but losses aren't deductible.

People who bet on politics therefore tend to be some combination of those with too low incomes for that to matter, not tuned in enough to realize that problem (so you'd wonder how generally tuned in they are), bet non-serious amounts of money compared to their means, foreigners, etc. IOW not the best population to maximize the 'wisdom of the crowd' effect you get in financial markets where the most tuned in people bet astronomical amounts of money. And even financial markets are far from infallible obviously, nobody knows the future. But political betting odds still give you useful info and I wouldn't automatically believe a Nate Silver probability estimate over betting odds (subject to statistical proof I should). Also published odds respond to events more quickly than polls or estimates based on polls. I shake my head more often to posts on this forum quoting obviously stale polls to make their points than ones quoting current betting odds.

Last edited by Corry El; 02-22-2020 at 02:48 PM.
  #27  
Old 02-22-2020, 02:49 PM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
Quote:
Originally Posted by Lance Turbo View Post
Here's a question: How many delegates do Alabama primary polls say, for instance, Biden is going to get in Alabama?

As of right now, there are two. One from July 2019 and one from March 2019.

Do the polls or prediction markets give us a clearer picture of what to expect from Alabama on March 3?
A lack of polls is a good reason to turn to the betting markets. But as mentioned above this is a self selected group of people guessing. There is no way the likely 99% white internet gamblers have a finger on the pulse on the Alabam vote. Just don't buy it.

Last edited by CarnalK; 02-22-2020 at 02:50 PM.
  #28  
Old 02-22-2020, 04:00 PM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
Quote:
Originally Posted by CarnalK View Post
A lack of polls is a good reason to turn to the betting markets. But as mentioned above this is a self selected group of people guessing. There is no way the likely 99% white internet gamblers have a finger on the pulse on the Alabam vote. Just don't buy it.
You are not required to buy it.

The accuracy of prediction markets (on average) is a direct consequence of the efficient market hypothesis. That's why people pay attention to betting markets. That's the answer to this thread.
  #29  
Old 02-22-2020, 04:08 PM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
So why don't you average some betting markets for your twitter bot? Because I see zero worth in tracking one group of gamblers' bets. Find that extremely tough to view as some "effecient market" or even reflective of one.

Last edited by CarnalK; 02-22-2020 at 04:13 PM.
  #30  
Old 02-23-2020, 05:16 PM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
Quote:
Originally Posted by CarnalK View Post
So why don't you average some betting markets for your twitter bot? Because I see zero worth in tracking one group of gamblers' bets. Find that extremely tough to view as some "effecient market" or even reflective of one.
I track PredictIt because that's the market I participate in. The efficient market hypothesis does not require you to view PredictIt as an efficient market in order to be applicable.

If you really think PredictIt is inefficient, there is a financial benefit to identifying and exploiting those inefficiencies. Best of luck.
  #31  
Old 02-23-2020, 06:18 PM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
Yeah, I hearbthat comeback ll the time. The problem is, I think it's erratically wrong so I can really make money casually assuming it's wrong in particular direction. I'm sure with study, you could make money betting against emotional/wave sentiment there. I'm not making that my hobby.
  #32  
Old 02-23-2020, 07:40 PM
Velocity is online now
Guest
 
Join Date: Jun 2014
Posts: 16,973
@ the OP: People pay attention to betting markets because, more often than not, the majority is correct.

If 87% of gamblers believe the Patriots will defeat the Jets, more likely than not, the Patriots will win. Sure, the Jets could pull off an upset, but the economical money is on the Pats.
  #33  
Old 02-23-2020, 07:49 PM
Heffalump and Roo is offline
Guest
 
Join Date: Nov 2006
Posts: 4,384
Quote:
Originally Posted by CarnalK View Post
Yeah, I hearbthat comeback ll the time. The problem is, I think it's erratically wrong so I can really make money casually assuming it's wrong in particular direction. I'm sure with study, you could make money betting against emotional/wave sentiment there. I'm not making that my hobby.
Almost all of those are real words, I'll give you that.
  #34  
Old 02-23-2020, 09:32 PM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
Yes, "Yeah, I hearbthat comeback ll the time." should be "Yeah, I hear that comeback all the time.". Otherwise, I wouldn't understand any other comprehension problems.
  #35  
Old 02-24-2020, 09:24 AM
Corry El is offline
Guest
 
Join Date: Jan 2013
Posts: 4,256
Quote:
Originally Posted by CarnalK View Post
Yeah, I hearbthat comeback ll the time. The problem is, I think it's erratically wrong so I can really make money casually assuming it's wrong in particular direction. I'm sure with study, you could make money betting against emotional/wave sentiment there. I'm not making that my hobby.
But every predictor of the future will be 'randomly wrong', at least, because nobody knows the future. The test is whether something is unbiased predictor, or usually is. The second statement 'I'm sure with study you could make money off it' IOW is a much stronger claim, one that needs evidence, and you offer none.

As I said above, among market mechanisms one might point out that election betting sites attract a minuscule amount of money compared to say financial markets 'betting'. Again I believe this is largely because tax treatment of 'gambling' (so defined in the US tax code) is punitive. Therefore it might be reasonable, especially, to believe the amounts bet per person are more likely to be amounts the person can easily afford to lose (other than problem gamblers, but they tend to be bad gamblers) and might somewhat weaken the basic argument in favor of market mechanisms as predictors: real money at stake makes people reveal their actual beliefs about reality, and the smartest money tends to dominate, whereas talk is cheap.

However again on 'worthless', the people betting on elections can read Nate Silver's site just like you can. Prices discovery IMO is extremely unlikely to be dominated by people who don't access easy sources like that, or else again some 'smart money' *would* 'make it their hobby' to exploit obvious inefficiencies. So I see little reason to believe betting market answers are worse than Silver's predictions of the same things in the 'steady state', when nothing major has happened since fresh polls. And in a more fluid situation where more polls are stale, betting odds sites are a more valuable source of info than prognosticators who if honest will just say 'we need more recent polls'.
  #36  
Old 03-24-2020, 05:56 AM
Win Place Show is offline
Guest
 
Join Date: Feb 2011
Posts: 293
I'm gonna reread this thread when I'm a little more awake, so I can better absorb some of the great points being made both for/against relying on the betting markets as prediction tools.

That being said, the fact that Trump is still in a literal dead-heat with Biden is gdamned depressing.
  #37  
Old 03-26-2020, 10:03 AM
The wind of my soul is offline
Guest
 
Join Date: Dec 2008
Location: Washington, D.C.
Posts: 2,078
Quote:
Originally Posted by Thing Fish View Post
So is there any scientific argument to be made that these markets are worth paying attention to?
The book Superforecasting: The Art and Science of Prediction by Philip E. Tetlock and Dan Gardner addresses this question. I will try to sum up the argument from memory, though I know my explanation won't be as thorough or accurate as the original explanation.

The idea behind betting markets is that you can tap into the wisdom of crowds. Let's say you have one tidbit of information that isn't publicly accessible -- for instance, you know that Candidate A's spouse isn't totally on-board with the campaign, and if the candidate starts to struggle, the spouse will be pressuring him to drop out rather than encouraging him to double down. That information on its own is of minimal value: perhaps you would adjust that candidate's estimated chance of victory down slightly, but only slightly.

Let's say another person knows that Candidate B is in declining health, and that the Candidate will not be able to attend as many fundraising events as his competitors as a result. That's another tidbit of minimally valuable information. Another person knows that Candidate C is in cahoots with an influential person in the party, and will receive an endorsement and the support of the influential person in three weeks time: that's another small tidbit.

If you gather together the predictions of enough people, each with access to slightly different information, then your overall picture becomes more accurate than it would be if you only had access to publicly available information. Poll aggregation will show you the public's personal preferences, but betting markets have the advantage of studying not only what people's current preferences are, but what factors are in place that would lead to changes in the candidates' trajectories.

(Spoiler: The book reveals that superforecasting groups have the highest prediction rate of all, so if you want to learn how to make predictions that are more accurate than both poll aggregation and betting markets, I recommend the book.)
  #38  
Old 03-26-2020, 10:27 AM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
There's no reason to think the average bettor has access to such insights. There's little reason to think the average bettor on those sites even lives in the same country as the candidate.

Right now, the RCP average of the betting sites has both Clinton and Cuomo ahead of Sanders.
https://www.realclearpolitics.com/el...20_nomination/

What clever insights do you figure they might have that us plebes don't?
  #39  
Old 03-26-2020, 11:23 AM
Chronos's Avatar
Chronos is offline
Charter Member
Moderator
 
Join Date: Jan 2000
Location: The Land of Cleves
Posts: 87,431
One obvious way that the betting markets are inefficient is that they're run by companies who are making a profit, and that profit comes out of the bettors' pockets, and they're competing against other markets, and so at some point, even a positive-expectation bet becomes negative. Even if I am absolutely certain that Clinton won't be the nominee, the return on betting against her might be lower than that from other investments that I could make over the same timespan. And even if literally all investors believe that she has literally no chance, they might all have better investments available, too. So even though nobody thinks she has any chance at all, nobody makes the bets that would move the needle in that direction, and so she remains on the betting market lists as having a nonzero chance.
  #40  
Old 03-26-2020, 01:31 PM
The wind of my soul is offline
Guest
 
Join Date: Dec 2008
Location: Washington, D.C.
Posts: 2,078
Quote:
Originally Posted by CarnalK View Post
There's no reason to think the average bettor has access to such insights. There's little reason to think the average bettor on those sites even lives in the same country as the candidate.

Right now, the RCP average of the betting sites has both Clinton and Cuomo ahead of Sanders.
https://www.realclearpolitics.com/el...20_nomination/

What clever insights do you figure they might have that us plebes don't?
Either I'm misunderstanding you, or you're misunderstanding me. I'm not saying that the average bettor has access to such insights. I'm saying that some do, maybe not a lot, but enough that those insights get factored into the bets that they make. If you take an aggregate of polls, then you are taking an aggregate merely of voter preferences, but if you take an aggregate of bets (which is what a betting market it), then you are aggregating human knowledge rather than just human preference.
  #41  
Old 03-26-2020, 02:38 PM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
I'm saying not enough have extra insight to make a difference. I'm saying they're almost all making choices that are based on polls, hunches and "momentum".
  #42  
Old 03-27-2020, 01:12 AM
septimus's Avatar
septimus is offline
Guest
 
Join Date: Dec 2009
Location: the Land of Smiles
Posts: 21,137
Nobody is saying that betting markets are a magic crystal ball whose estimates are perfect. (Nate Silver's numbers may be about as good or even better — does he have a page showing odds on the nomination, and on November?) As Chronos points out, fees and regulations hamper the markets. If the U.S. legalized such bets, the market efficiency would increase greatly.

Markets for betting on football, basketball, etc. are very large. Some people can beat those markets overall, but it isn't easy.

But it's rather silly to say people are rejecting "sure-thing" bets because they have better investment opportunities. What are those better-than-certain opportunities? That the stock market will go up? That the price of gold will always go down??! I'm not betting on politics — because I don't think I'm smarter than the average punter. Still it is ... interesting ... that several of you are certain you are smarter but can't be bothered to pick up a few thousands in extra pocket money.

There's some chance that, due to illness or whatever, Trump or Biden will need to be replaced as candidate. If Biden should drop out before the Convention who would replace him. Neither logic not "The DNC" would make Sanders the choice, IMO. Klobuchar?? If not her, then who? I'm not sure that the idea of sending Hillary in as the late-inning reliever is so far-fetched.
  #43  
Old 03-27-2020, 07:24 AM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
Are you kidding? Of course it's far fetched. And how about Cuomo? Is it "not far fetched" that he'll drop being governor in the middle of the Corona outbreak and run for president?

And the money question: are those scenarios remotely more likely or even as likely as Sander winning big in the remaining contests?
  #44  
Old 03-27-2020, 10:11 AM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
You can buy 'Yes' for Biden to win the Dem nomination right now on PredictIt for $0.77 per share. Those shares will each be worth $1.00 in June if he wins the nomination. If you believe that Biden winning the nomination is a sure thing why aren't you buying those? What other investment are you putting your money in that has an ROI of > 25% over the next three months?
  #45  
Old 03-27-2020, 11:32 AM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
Quote:
Originally Posted by Lance Turbo View Post
You can buy 'Yes' for Biden to win the Dem nomination right now on PredictIt for $0.77 per share. Those shares will each be worth $1.00 in June if he wins the nomination. If you believe that Biden winning the nomination is a sure thing why aren't you buying those? What other investment are you putting your money in that has an ROI of > 25% over the next three months?
Those gambling sites are illegal from my jurisdiction, so you'll have to come up with some other stupid comeback.
  #46  
Old 03-27-2020, 11:58 AM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
Quote:
Originally Posted by CarnalK View Post
Those gambling sites are illegal from my jurisdiction, so you'll have to come up with some other stupid comeback.
It's not a stupid comeback. I'm genuinely trying to understand your over the top hostility toward prediction markets. Did a prediction market kick your dog? Put its thumb in your beer?

There's $14 million dollars in the PredictIt market for the Dem nomination. That's a financial incentive for people to be making well researched, sound decisions. You seem to be emotionally invested in the idea that it's just people guessing, but with that amount of money floating around there's more than enough reason for people to take it seriously.

It is true that prediction markets are prone to favorite-longshot bias, so there will almost always be a little weirdness in the tails. However, that is something that can be corrected for and thus not enough reason to dismiss prediction markets entirely.

Joe Biden at $0.77 is capturing something real that is happening and might not be reflected in the polling or his delegate lead. There's a non-zero chance that Joe Biden drops out of the race before the convention. Possibly due to COVID-19, maybe due to Tara Reade, or possibly some other reason that I haven't considered.

I don't personally think that's the case, so I bought some Joe 'Yes' today, but it is ridiculous to completely dismiss his drop from $0.90 a week ago to $0.77 today as nothing. That represents a lot of real money moving around.

Finally, your objections to where PredictIt bettors live or the color of their skin are truly bizarre. I can't imagine why you think that has a bearing on their ability to make informed decisions.
  #47  
Old 03-27-2020, 12:04 PM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
What it's capturing is people dreaming of a longshot bet.

Markets don't predict things. They match supply and demand. The reason I push back hard on the betting market is because I find the "magical powers of the market" shit extremely annoying.
  #48  
Old 03-27-2020, 12:13 PM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
Quote:
Originally Posted by CarnalK View Post
Markets don't predict things.
You are simply wrong about this.

There's a pretty solid body of academic research that shows this.

I recommend FORECASTING ELECTIONS: COMPARING PREDICTION MARKETS, POLLS, AND THEIR BIASES by David Rothschild.
  #49  
Old 03-27-2020, 12:34 PM
CarnalK's Avatar
CarnalK is offline
Guest
 
Join Date: Jul 2000
Posts: 19,826
"Conclusion

In 2008, Fivethirtyeight, a debiased poll-based forecast, offered to the general public a more accurate forecast than raw poll numbers or raw prediction market prices."


Hmmm. Also, Rothschild works at Predictit, right?

Last edited by CarnalK; 03-27-2020 at 12:37 PM.
  #50  
Old 03-27-2020, 12:57 PM
Lance Turbo is offline
Guest
 
Join Date: Aug 1999
Location: Asheville, NC
Posts: 4,680
Quote:
Originally Posted by CarnalK View Post
"Conclusion

In 2008, Fivethirtyeight, a debiased poll-based forecast, offered to the general public a more accurate forecast than raw poll numbers or raw prediction market prices."


Hmmm. Also, Rothschild works at Predictit, right?
Wow. That is some really dishonest selective quoting there. Here's the whole paragraph...

Quote:
In 2008, FiveThirtyEight, a debiased poll-based forecast, offered to the general public a more accurate forecast than raw poll numbers or raw prediction market prices. But, the analysis here shows that were Intrade’s prices debiased, they would have provided a more accurate forecast and more valuable information than the best poll-based forecasts currently available, especially early in the cycle and in uncertain races. An examination of the structure of these forecasts helps explain this informational advantage
Intrade outperformed 538 when well known biases, like favorite-longshot bias, were corrected for.

But this thread is not about whether 538 is better than prediction markets. It's about whether prediction markets have any value at all, and they clearly do even if 538 performed slightly better than them in some election or other.

Finally, David Rothschild does not, and has never, worked at PredictIt.
Reply

Bookmarks

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is Off
HTML code is Off

Forum Jump


All times are GMT -5. The time now is 07:14 PM.

Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2020, vBulletin Solutions, Inc.

Send questions for Cecil Adams to: cecil@straightdope.com

Send comments about this website to: webmaster@straightdope.com

Terms of Use / Privacy Policy

Advertise on the Straight Dope!
(Your direct line to thousands of the smartest, hippest people on the planet, plus a few total dipsticks.)

Copyright © 2019 STM Reader, LLC.

 
Copyright © 2017