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, in opposition to people who find themselves placing their very own cash on their very own predictions.
Like Alex, I tracked these markets intently, which is why I used to be telling associates 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 instructed 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.
In the event you adopted the election, you understand that one of many massive points was which means Pennsylvania would go. If Donald Trump have been to win Pennsylvania, he would doubtless win the nationwide election. All of us knew that it might be shut however we have been additionally instructed that it may take hours to rely 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 mentioned to my spouse, whereas we have been watching the outcomes stay, that if Donald Trump gained at the very least 4 extra factors within the in style 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 just one.2 proportion factors. So with a acquire of at the very least 4-points in New Jersey, relative to his share in 2020, he would doubtless get at the very least a 1-point margin in Pennsylvania. We discovered 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. However it was means higher than sitting there within the early night PST or late night EDT, questioning, like tens of millions of People, who would win.
Notice: By the best way, I received $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.
