Alex Tabarrok has a superb put up at Marginal Revolution this morning explaining why he had and has confidence in prediction markets. It’s very exhausting 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 mates 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, nevertheless it was solely a short time after.
For those who adopted the election, you realize that one of many huge points was which means Pennsylvania would go. If Donald Trump have been to win Pennsylvania, he would seemingly win the nationwide election. All of us knew that it could be shut however we have been additionally informed that it may take hours to rely the Pennsylvania vote, because it did.
However New Jersey abuts Pennsylvania. Why not, I believed, use New Jersey as a number one indicator of the vote in Pennsylvania? I mentioned to my spouse, whereas we have been watching the outcomes dwell, that if Donald Trump gained at the least 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 acquire of at the least 4-points in New Jersey, relative to his share in 2020, he would seemingly get at the least 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. But it surely was means higher than sitting there within the early night PST or late night EDT, questioning, like hundreds of thousands of Individuals, who would win.
Word: 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.
