…from the outside. Thoughts from Scott Adams, with an interesting idea:
…what if the worst-case scenario is really, really likely, as in the case of climate change disaster? In that case, shouldn’t you manage to the worst case? Well, yes, but only if you are sure the risk is as high as you think. And I don’t see any way a non-scientist could be exposed to both sides of the argument and assign a risk to it.
Given the wildly different assessments of climate change risks within the non-scientist community, perhaps we need some sort of insurance/betting market. That would allow the climate science alarmists to buy “insurance” from the climate science skeptics. That way if the climate goes bad at least the alarmists will have extra cash to build their underground homes. And that cash will come out of the pockets of the science-deniers. Sweet!
But if the deniers are right, and they want to be rewarded by the alarmists for their rightness, the insurance/betting market would make that possible.
It would also be fascinating to see where the public put the betting odds for climate science. Would people expose themselves to both sides of the debate before betting?
The smart ones would.
1) Pressure the Left to answer “How much money?”
2) Spend that much money on nukes. (After providing a certification & indemnification package to prevent all the money from going straight to lawyers.)
3) Win. Win.
The key to strategy is not finding -a- route to victory. It is arranging the problem such that -all- routes lead to victory.
I think this is one of the great missed opportunities of the past twenty years. A betting market would have cut through a lot of climate change disinformation and lies by now. Way back when in 1996, I had the privilege of participating in the Foresight Exchange. One of the very first claims traded was a claim, SLvl that global sea level would rise one meter by 2030 over 1994 levels. Some people were so optimistic that they traded as high as roughly 50% likelihood that the claim would come true (there were three run ups that hit or came close, the last was in 2003). Now it’s trading more like 11% (though the market is pretty close to dead these days) and will fall to 0% over the next decade and a half.
If this had been real money, there would be some climate change activists ruing their early exuberance and maybe being a bit more cautious in the future about such things. And skeptics bragging that they built their new house on the winnings from being right on that claim.
It’s a clever way to get people to think about the future rather than merely assume that they’re right. And in today’s era of “post-truth” and “fake news” (which, I should note was the instigation for these sorts of markets dating from the 1980s), markets like this can do a good job of helping us figure out what we really believe on such things as well as institutional incentives to guess better.
A little over a decade back, we had an opportunity to do that, at least at the institutional level in the federal government with the Policy Analysis Market, but it got shot down by a couple of Democrat US senators, Byron Dorgan and Ron Wyden bloviating about “assassination markets”.
I think sooner or later, we will get a viable long term prediction market going. And that will be the death knell of things like climate change hysteria. But it’s a lot harder than I expected it would be due to the legal obstacles.
How did that political futures market do with the most recent presidential election?
Looking at the Iowa Elections Market, during the month of October Clinton appears to have bounced between 50% and 80% with most trades under 60%, but huge buys above 60% which probably resulted in the mean price by shares traded being above 60%, but the mean price by transaction being below.
So Clinton was favored, but with a significant probability of Trump winning – above 30% I’d say. Compares well with conventional predictions which heavily favored Clinton.
The liability of such a betting market is the bet needs to be on something objectively measurable, by defined methods. The scam artists who’d cook data to support their pet theory would surely cook data to win a bet if they could.
I agree. And there’s plenty more shenanigans where that came from. For example, insider trading would be very hard to catch, assuming the market even tries. For the market I was in, inside trading was strongly encouraged. There was even a famous example from a previous version of the market where one of the founders had a claim on whether they obtained their degree and were allowed to trade on it as well. A lot of strange trading suddenly happened when they successfully passed their dissertation defense.
Obviously, play money markets aren’t going to have to worry about legal repercussions from allowing insider trading, but it’s still surprising how well it worked out. There were a bunch of experienced traders who were aware of the risk and did well despite that.
A prediction market is not a place to bet your retirement money, but it can work even when one abandons some of the rules of normal stock and commodity markets.
The problem is the insurance companies dealing with tens of thousands of morons filing climate claims because it rained on their wedding.
Personally, I think a market already exists in relation to Climate Science. For example, Al Gore and Leo DiCaprio both claim to have a major concern about catastrophic AGW. Yet both routinely create more GHG in one year than I will in my lifetime. If I thought that my actions would destroy the lives of many people in a few decades; I wouldn’t be behaving as they are. Alas, their actions suggest they don’t put much stock in their words.
Otherwise, I think a gaming market would be useless. I get why people think they work, but not everyone that has an opinion would participate. For example, I have strong opinions about the federal government. I think we should have less of it. I think that, because I don’t want to worry about politics everyday and in regards to do everything I do, such as baking a cake or using the restroom. If I have that much disinterest; why would I play a market? Conversely, those that have a major interest would run the market.
But I also believe in freedom, so I have no problem if others want to get into a market I have no interest in. So I don’t oppose the idea; I just don’t think it will show precisely what some think it will.
It makes it hard to make a betting market that most predictions take decades to verify. Since most climate models are only even _considered_ worthwhile for finding overall global average temperature, we get _one new data point per month_.
There have been a couple of well-known bets by climate scientists, for instance, James Annan. The trouble is that they are betting against Sky Dragons, who believe that it’s going to get _colder_, so that the over-under is no warming at all. Probably most of us don’t expect that.
The really interesting discussion right now in climate science is, What is the climate sensitivity to CO2? Is it 3 or above, as most of the cost work assumes? Or is it more like 2 or less, as some recent work (Nic Lewis) suggests? Makes an enormous difference in terms of the outcomes, and that’s where I would have liked the betting to be.
Looks like there’s news on the lawsuit?