Alex Tabarrok has a superb submit at Marginal Revolution this morning explaining why he had and has confidence in prediction markets. It’s very exhausting to argue, whereas predicting, in opposition to 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 japanese time zone, but it surely was solely a short time after.
Should you adopted the election, you already know that one of many huge points was which approach Pennsylvania would go. If Donald Trump had been to win Pennsylvania, he would seemingly win the nationwide election. All of us knew that it could be shut however we had been additionally informed that it might take hours to depend 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 had been watching the outcomes stay, that if Donald Trump gained at the very least 4 extra factors within the standard vote in New Jersey than he gained in opposition to Biden in 2020, he would win Pennsylvania. Why? As a result of in 2020 Trump had misplaced Pennsylvania by only one.2 share factors. So with a achieve of at the very least 4-points in New Jersey, relative to his share in 2020, he would seemingly get at the very least a 1-point margin in Pennsylvania. We discovered early that Trump beat his 2020 New Jersey share by about 5 share factors. He ended up getting a 2-point margin in Pennsylvania.
I’m not saying that my methodology was higher than the prediction markets: my methodology was clearly worse as a result of it gave me outcomes a lot later. Nevertheless it was approach higher than sitting there within the early night PST or late night EDT, questioning, like thousands and thousands of People, who would win.
Word: By the best way, I gained $40 from a pal 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.
