Alex Tabarrok has a wonderful publish at Marginal Revolution this morning explaining why he had and has confidence in prediction markets. It’s very laborious to argue, whereas predicting, towards people who find themselves placing their very own cash on their very own predictions.
Like Alex, I tracked these markets carefully, which is why I used to be telling buddies that I anticipated Donald Trump to win the presidential election and the Republicans to take the Senate.
I additionally had my very own private prediction machine that informed me Trump would win. Admittedly, it was after the polls had closed within the jap time zone, but it surely was solely a short time after.
If you happen to adopted the election, you understand that one of many huge points was which means Pennsylvania would go. If Donald Trump had been to win Pennsylvania, he would probably win the nationwide election. All of us knew that it will be shut however we had been additionally informed that it may take hours to depend the Pennsylvania vote, because it did.
However New Jersey abuts Pennsylvania. Why not, I assumed, use New Jersey as a number one indicator of the vote in Pennsylvania? I stated to my spouse, whereas we had been watching the outcomes reside, that if Donald Trump gained a minimum of 4 extra factors within the in style vote in New Jersey than he gained towards Biden in 2020, he would win Pennsylvania. Why? As a result of in 2020 Trump had misplaced Pennsylvania by only one.2 proportion factors. So with a achieve of a minimum of 4-points in New Jersey, relative to his share in 2020, he would probably get a minimum of a 1-point margin in Pennsylvania. We came upon early that Trump beat his 2020 New Jersey proportion by about 5 proportion factors. He ended up getting a 2-point margin in Pennsylvania.
I’m not saying that my technique was higher than the prediction markets: my technique was clearly worse as a result of it gave me outcomes a lot later. Nevertheless it was means higher than sitting there within the early night PST or late night EDT, questioning, like hundreds of thousands of People, who would win.
Be aware: By the way in which, I gained $40 from a buddy on Fb and $10 from a neighbor, betting that Trump would win. I made these bets 2 to three days earlier than the election, and what gave me confidence was the prediction markets. These are those I adopted.