Betting on politics to make difference

Published on Thursday, 5 September 2013 21:23 - Written by

Would we pay more attention to elections if we knew we had a direct stake in them — say a fiver on the governor’s race? Or a few bucks on the Republican primary?

Scientists say we would. And they say our predictions are all the more accurate for that. It’s a bit of a shame, because we really do have a direct stake in who we elect, even if we’re not the gambling type.

In the United Kingdom, a think tank is taking advantage of this phenomenon to help predict the future.

“Free-market think tank the Adam Smith Institute on Wednesday launched two betting markets in an attempt to use the ‘wisdom of crowds’ to beat the Bank of England’s official forecasters,” CNBC reports. “Punters can place bets on what the rate of both U.K. inflation and unemployment will be on June 1, 2015.”

This isn’t a game of chance, really. It’s a way of encouraging people to think more deeply about public policy and politics. The Bank of England has economic forecasters who think about these things all day. But they’re fallible, like the rest of us. The Adam Smith Institute wants to show voters that their own predictions, if stripped of emotion and bias, could be as accurate, or even more so.

“The Adam Smith Institute argued that official economists have repeatedly got these forecasts wrong,” CNBC pointed out. “By contrast, bookmaker odds are often more reliable than expert opinions — on everything from sports to the Eurovision Song Contest — because they eliminate individual biases. Sam Bowman, the think tank’s research director, said the betting markets should ‘out-predict’ the Bank of England’s experts because they combine the local knowledge of lots of different people.”

One lesson here is that political polling is pretty inaccurate. They all reflect bias, mostly because we’re all biased human beings (even pollsters). And as the last presidential election demonstrated, there are Democratic pollsters and Republican pollsters, and they tend to be biased toward good news for their respective parties.

But when pollsters and forecasters really try to take emotion and bias out of the mix, the results can be more accurate.

In 2012, the New York Times’ Nate Silver was spot-on in his predictions (he correctly forecast all 50 states and the District of Columbia). That’s not because he’s a Democrat making predictions in a Democratic year. It’s because he’s a baseball guy, and approached the numbers as a sports analyst would.

And when Joe Scarborough challenged his prediction a few days before the election, Silver responded by offering to bet $1,000 on the results (the proceeds would have gone to charity).

The real point here is that people pay attention to things more closely — and more realistically — when they believe they have a stake in the outcome. That’s only natural.

But it’s something of a shame. We should realize that we really do have stake in elections, even the down-ballot and local races. Decisions made by our political leaders, at all levels, directly affect us.

So paying attention is important. You can bet on that.