Manifold is now also doing Sweepstakes markets, which allow you to win real money by cashing out when you win. See the rules here. Sign up and use promo code FOP9O and you’ll get $10 in both mana and sweepcash.

This post introduces the four Sweepstake markets that I have been involved in creating and will be betting on. If you want to come bet with or against my positions, click on the embedded links to the markets below.

Note that to bet on the Sweepstakes version of the market, you need to click on the yellow S tab in the top right corner. See the two screenshots below.

If the purple M is highlighted you’re in the mana market. If it’s the yellow S, you’re in the Sweepstakes market, and playing for real money

The four Sweepstakes markets I’ve created can be grouped into three broad categories: vibes based, long-shot based on uncertainty the market is not taking into account, and a bet where the market is overestimating a tail end event. Let’s consider these in turn.

Ted Cruz Is No NFL Star

Republicans have a good shot at taking the Senate. They are sure to flip West Virginia, which would put them at 50 seats. That alone will give them control if Trump wins the presidency. If not, Montana looks overwhelmingly likely to flip too. Ohio, Pennsylvania, and Michigan are also up for grabs.

All of this assumes Republicans don’t lose any seats. I think if there’s one place it might happen, it’s Texas, where Ted Cruz is running against Colin Allred, a UC Berkeley School of Law graduate, member of the House, and former linebacker for the Tennessee Titans. Right now, the market gives Cruz an 81% chance of retaining his seat. Note again that if you want to bet on the Sweepstakes market below, click on the link and then the yellow tab in the top right once you get to the site.

I say Allred is underpriced, but my view is mostly vibes based. With every election, one needs to start with the polls. As I write this, Cruz is leading by an average of 2.7 across the last six that have been conducted. Since Texas overwhelmingly votes Republican, most analysts would say that the results are likely to revert to the mean of the state by Election Day.

But I just feel like Allred is a great candidate, and Ted Cruz is, well, Ted Cruz. Polls that show a tight race report that Allred’s favorability is positive, while Cruz is underwater. The challenger is of course less well known, but this gap will narrow by Election Day. Cruz’ unpopularity in his state gives me confidence that my dislike of the man is shared by others and not based in some quirk in my personality.

This recent Texas Monthly profile of Ted Cruz reminded me of why I find him so distasteful. There’s something off about the guy. And the fact that he’s smart makes him engaging in MAGA theatrics that much more disturbing. When the whistleblower nonsense was making the rounds last month, the only politicians I saw fall for it were MTG and Ted Cruz. Now, I expect this from Greene. She’s perhaps doing the best she can with the gifts God gave her. But Cruz is either lying or suffering from one of the worst cases of brain rot we’ve seen in politics. A US senator chasing clicks is a depressing sight. I remember one time seeing him advocating the need for fewer doors in order to prevent school shootings, and found the combination of the goofy ad hoc nature of the argument along with the passion with which he delivered it to be unsettling.

It’s one thing to say that stuff happens, dead schoolchildren is the cost of freedom. Or one can call for gun control, or just remain silent. To say that door control is the solution, however, plays to a voter who must be an outlier in terms of both motivated reasoning and stupidity. What kind of man does this? Perhaps one who listens to Trump call his wife ugly and then spends the next nine years on his knees treating him like Jesus in lockstep with the rest of the party. What worms these people are.

What were we talking about again? Oh yeah, prediction markets. Anyway, maybe I’m too emotional to judge Ted Cruz’ prospects objectively. But based on vibes and perhaps my own wishful thinking, I’m going to give Allred a 30% chance of pulling off the upset.

Trump Wins the Popular Vote and Loses the Electoral College

In 2016, Hillary won more votes but Trump became president. The next time, the same thing almost happened again but Biden barely squeaked by in the key states. Republicans have a natural advantage in the electoral college, and recent history tells us that there’s a distinct possibility we see another election where the GOP candidate gets fewer votes than his opponent but nonetheless is inaugurated on January 20.

For a while now, prediction markets across platforms have given about a 25% chance that Trump wins the electoral college but loses the popular vote and a 25% chance he wins both. Kamala winning both is given about 50% and rounds off the odds. The possibility that Trump actually wins the popular vote and loses the electoral college is considered extremely remote. Right now it’s at a 2% chance in the Sweepstakes market.

Nate Silver might say even that is too high. He recently found that in 40,000 simulations, a split outcome where Democrats win the presidency happened 102 times, which translates to a 1 in 400 chance.

My view is that this should be closer to 3-4% instead of 2% or even 0.25%. In a world where there are four possible outcomes, you start with an assumption that each has a 25% chance of happening. Of course you then adjust your forecast based on what we know about the real world. Here, we think we know the election is close, and these days Democrats tend to run up the numbers in population-rich blue states while struggling more in much of the rest of the country. So a split outcome favoring the Democrats seems unlikely. But by how much?

According to Nate Silver’s model, right now Kamala is leading in the national vote by 3%. She’s also winning in enough states to pull off a slight victory in the electoral college. Simply imagine that the swing state polls are right, but national polling is underestimating Trump by 3%-4%. That’s all it would take to get the split outcome favoring Democrats. Now, this is unlikely because of the tendency of errors to be correlated; polls underestimating Trump nationally means they are likely to do so in swing states too. But I can imagine a scenario where he does much better than expected in California and New York but lands about where we thought he was in Pennsylvania, Michigan, and Wisconsin. Not the most likely outcome, but I think it’s higher than 2%.

A recent article by Nate Cohn discusses how pollsters are just sort of winging it. Since they underestimated Trump twice already, some of them are bending over backwards not to do so again. Them over- or under-shooting the mark seem about equally plausible. The lesson I take from this piece is that we know it’ll probably be close but have no idea whether the pollsters are doing a good job capturing current dynamics in swing states. When there’s a great deal of uncertainty, bet on the event that is given a very low probability based on models that assume we know a lot more than we do.

Democracy Will Survive

Right now, the Sweepstakes market gives a 10% chance that the election will not be certified on January 6. The mana market is higher, at 18%. I think that’s crazy, and the number should be closer to 4%. Note that even in 2021, when a mob shut down Congress for six hours, the election was certified by 3:32 AM on the seventh. In part, this was because Congress after having scrammed for its life was determined not to let the insurrectionists win. This January, the Secret Service is going to beef up security, and authorities know to expect trouble. In 2021, the surprise nature of the event made sure that they were caught flat footed. You don’t expect a speech by the president to end up with his supporters marching towards the Capitol to try and hang his vice president, but the Trump era has been full of surprises.

Another storming that delays the results for several hours is probably not in the cards. One could imagine other shenanigans though. Could Democrats or Republicans mount a serious challenge to the election results that end up delaying certification? We should consider each scenario in turn. If Trump wins, I think Democrats obviously accept defeat. They have made acknowledging the outcomes of elections core to their identity over the last four years, and being the Elite Human Capital party, they tend not to turn on their beliefs that quickly.

If Trump loses, he’ll of course demand every Republican in any position of power do whatever it takes to get him back into office. But he couldn’t pull off a coup even when in the White House. He’s much less likely to be able to do so while holed up in Mar-a-Lago. In Georgia, Trump has apparently gotten control of the election board and they’ve implemented some MAGA preferred policies. I’m unsure if this means that Trump supporters are in a position to steal Georgia, but the other swing states don’t see anything similar going on. For the certification of the election to be delayed, the entire outcome must depend on Georgia, the results in that state must be close enough to be controversial, MAGAs have to try to steal it, and this has to remain unsettled in the courts by January 6. This is a highly unlikely series of events. I guess it’s also possible that the certification gets delayed based on controversy in one state even if it doesn’t matter for the election outcome, but I expect Congress to put its foot down here.

Perhaps there’s a 4% chance something goes wrong. MAGAs might plan a major terrorist attack. Someone could get assassinated between the election and January 20. Yet these scenarios are very far fetched.

For similar reasons, I think we’re getting an inauguration on January 20. The market gives it a 98% chance of happening as of now. I say it’s over 99%.

Three Types of Bets

These three categories of bets I’m making here are recurring types in prediction markets. To make money, you have to outsmart the conventional wisdom. Sometimes, the prevailing view overestimates tail end events, in which case you bet on the sure thing and treat your position as a low-risk bond. I put a huge portion of my net worth into Michelle Obama not being the Democratic nominee back when the market was giving that a 5-10% chance of happening due to conservative stupidity. I never for a moment felt my money was at any risk.

Other times, an event is given a very small chance of happening, and you think going against the crowd will return a positive expected value, even if you are likely to lose. If Trump wins the popular vote but loses the electoral college, I’ll be a very happy man, as I put a lot of money on this happening, even though I’m pretty confident it won’t. Think about this. If you are good at picking out events that the market puts at 2% probability but should be 4%, you’ll lose 96% of the time but end up doubling your money! My experience is that these markets are rare so when you see one you should jump on it.

Finally, there’s stuff that’s in the middle of the distribution, where you think the market is wrong by maybe 5 to 20 percentage points in one direction or another. This is the Colin Allred bet and it might just be based on vibes. Allowing oneself some emotional indulgence once in a while out of a hatred for Ted Cruz is fine and adds some fun to the whole process.

If you have decent judgment on these things, you too can make good money through a combination of safe bets, positive expected value lotto tickets, and vibes.

From since at least the birth of philosophy, the wisest among us have recognized that what is believed by the majority of people or those in power isn’t necessarily what is true. Every prophet, political movement, and keyboard warrior operates on the basis of “I’m right and others are wrong.”

A few decades ago, Phil Tetlock came along and showed that expertise is mostly fake. This doesn’t mean that people who know what they’re talking about don’t exist. Rather, our society does a poor job of figuring out who these people are when deciding who to listen to.

The best systems for making decisions so far invented have involved a price signal component. Prices aggregate information, distill it into numbers, and align incentives so that people behave rationally. This means that if you want to know the value of a major corporation, or a haircut or a loaf of bread in your area, that information is available.

While modern markets are extremely developed, other kinds of decision-making remain at their infancy stage. In politics or public policy, making use of price mechanisms is not so straightforward. Democracy aggregates what voters think, and that may be the best system we have developed so far, but its fatal flaw is that it does not align incentives. The individual investor in a stock either makes a killing or goes broke depending on his own choices. The citizen votes and has an impact that rounds to zero. He therefore indulges in whatever ideas or positions make him feel good, regardless of the impact such views have in the aggregate. The worlds of punditry, academia, and expertise more generally have a similar lack of accountability problem.

For those reasons, I’ve always been a fan of event markets, which allow people to bet on what is going to happen in the real world. Last week, there was controversy over the cause of an explosion outside of a hospital in Gaza. To this layman observer, supporters of the Israelis and Palestinians both seemed to make equally plausible arguments. But early on prediction markets overwhelmingly said that it was likely the Palestinian side that was responsible, and they were correct.

For those of us who go through life constantly shaking our heads at how much foolishness is out there, prediction markets are a miracle device. If you’re truly correct about most things you care about, you’ll often find that other people either aren’t willing to put their money where their mouths are, or if they are, you can simply take that money. And if they’re right and you’re wrong, that’s valuable information too!

Given all of that, I’m excited to announce that I’m transitioning from being a guy who writes about prediction markets to one who is also involved in the business side of making them a larger part of our politics and culture. I have just come on board with Insight Prediction.

Working with them, I’ve created a series of markets that I take particular interest in. They are listed below. If you’re going to start betting on the site, please use this link to sign up, as I will get a cut of the fees. Same if you click through to the markets below. In addition, if you sign up, confirm your identity on the “My Account” page, and make at least $250 in trades in the first week, you’ll get a $50 bonus (the confirmation part is only so people don’t pull a scam by signing up through various accounts and getting multiple bonuses. Confirming your identity is not necessary to withdraw money, only to get the bonus).

Since prediction markets are, with a few exceptions, not legally authorized in the US, the website is only available to non-Americans and runs on crypto. This sounded very complex to me at first and too much to bother with, but it turns out that it’s all very easy. Some Americans use VPNs to bet on websites like this, but I can’t encourage you to do that. As for transferring funds, if you have a Coinbase account, or you belong to any crypto exchange, getting money into Insight Prediction takes literally seconds. See here for a short guide under “How do I deposit money?” You can deposit US Dollar Coins (USDC), which are pegged to the US dollar, if you don’t want to worry about fluctuations in the prices of cryptocurrencies while you’re betting. Easiest path to me seems to be to buy USDC from Coinbase, and then transfer the USDC to Insight.

Here are the markets I’m watching particularly closely.

Will RFK get 5% of the popular vote? I was expecting RFK boosters to take YES, so I thought this would be like a 40-60 market. But the market right now says 80% NO! That looks reasonably priced to me. I guess RFK boosters aren’t willing to actually bet on their beliefs, just like the anti-Israeli types. Markets really do discipline people, and those with anti-establishment and populist leanings end up looking bad whenever they can be relied upon.

Trump sweep early primary states? I think there’s a 60% chance Trump sweeps Iowa, New Hampshire, Nevada, and South Carolina. Really, as I’ve been saying for a very long time, this thing isn’t much of a contest. But the market has him at between 60% and 80% to win each of the four early states. It’s worth noting that 80% would be the same probability of him winning the nomination overall at Insight, and one would think the likelihood of a sweep would be lower, unless the market thinks something is going to happen to Trump between the early primary states and the convention, which isn’t crazy. More likely, this is just a new and low liquidity market, so the probability of a sweep will go down as it becomes established. I think Trump at 85% to win the nomination is about right, so I’d still be buying Trump shares.

Speaking of 2024 nominees, Insight has Biden higher than other prediction sites. If you think there is a decent chance of him going down, it is the best place to bet on that theory.

What will be the balance of power in Congress after the 2024 election? I’m more pessimistic about Republican prospects than most people are, because I think the pro-life movement really drags the party down, and there’s just a general sense that these aren’t normal people. That said, the Senate map is really hard for Democrats. Republicans are almost sure to win West Virginia, then they just need either Ohio or Montana to gain a majority. Both of the latter states have incumbents that have won tough elections before. I also think there’s a chance we may get a surprise like Ted Cruz losing to Colin Allred. A surprise in the other direction, say Republicans taking Michigan or Wisconsin, is unlikely because, again, abortion. With all that said, I think the odds are:

D House, R Senate: 40%

D House, D Senate: 30%

R House, R Senate: 28%

R House, D Senate: 2%

The big difference between me and the market is that it’s much more confident in a Republican sweep, so I’d bet NO on that.

Will Black Students Be Less Than 10% of the Ivy League Class of 2028? I thought of this market as a way to settle debates about the degree to which SFFA v Harvard matters. The only direct way to know for sure is to look at how the racial composition of elite universities changes. We found the black numbers for four Ivy League schools for the class of 2027, which was let in under the last admissions cycle when affirmative action was allowed:

Harvard: 14.1%

Columbia: 20%

Yale: 14%

Princeton: 9%

That’s an average of 14.3%. If next year, blacks are less than 10% on average across these schools, this market will settle as YES. I think there’s a 70% chance this will be the case. The market leans in the same direction. Do you believe I’m being naive and liberal bureaucrats will just ignore the law and do whatever they want anyway? If so, come bet.

Note that if one or more of the four schools listed above don’t report numbers, we will go with those that do. If none of them release any kind of data, we will assume it’s because the numbers are too embarrassing and the market will settle as YES, since what we’re trying to get at is whether the state of the law with regards to affirmative action matters that much.

Will Israel Control Gaza City by December 1st? We’re not used to radical movements actually losing anymore, mainly because powerful states don’t fight wars like they used to. But I think people might be surprised at what collective punishment can accomplish. At the same time, I’ve never thought that it was guaranteed that Israel would go in soon. It seems to make sense to just siege and bomb indefinitely, and Hamas should get weaker over time. But who knows, there might be political motivations to invade soon, or they might think that international pressure will get much worse as time goes on, although I have doubts about the latter worry. I think there’s a good chance Israel waits before sending in a substantial number of ground troops, but if it does in the immediate future it may take Gaza City pretty fast. I’d give this market overall a 30% chance of settling as YES.

I’ll probably be announcing more new initiatives related to prediction markets in the coming weeks and months. For now, happy betting.

I’m proud to announce that I am personally joining the lawsuit. If you have used PredictIt and would like to also become involved, please reach out at PredictItSuit@outlook.com. Don’t wait, as the plaintiffs list is going to be finalized by this Tuesday, October 4. This will not cost you any legal expenses. It would be a major help to have other academics, intellectuals, and regular PredictIt users join the suit.

I’ve attached the following statement to the court about why PredictIt should continue to operate.

My name is Richard Hanania. I am the President of the Center for the Study of Partisanship and Ideology and a research fellow at the University of Texas.

I am also – due to my study of expertise and belief in intellectual accountability – a long-time user of PredictIt and a believer in prediction markets. I therefore have over the years made bets at PredictIt and publicly kept track of my portfolio, while encouraging other public intellectuals to do the same. Here are some of my writings on the topic.

https://www.nytimes.com/2021/09/20/opinion/afghanistan-experts-expertise.html

https://richardhanania.substack.com/p/the-problem-with-polling-might-be

https://richardhanania.substack.com/p/predictions-spring-2021

When I present an opinion, often many will agree and others won’t. One way I have found to settle a debate, or at least move it forward, is to ask if someone believes what they are saying, whether they would be willing to put their money on it. Such an accountability mechanism benefits public discourse. If someone says that a candidate has a “good” or “bad” chance at winning an election, for years I have found it useful to ask them what exactly they mean by that, and whether they would buy or sell at the current PredictIt price.

I’m sure many scholars have presented the court with evidence about how prediction markets are useful in providing information about the likelihood of future events. I would like to stress the potential for PredictIt and other sites like it to overcome many of the shortcomings in American intellectual life, including decreasing civility and our seeming inability to overcome partisan differences and have conversations across political tribes. When I speak in the language of betting markets, I find that it is easier to find common ground with those of differing political views. And when I disagree with them, I am better able to do so constructively when we direct our attention towards confidence intervals and probability. In the long run, some are proved right and others wrong, which allows for all of us to update our beliefs and ultimately better understand the world.

Prediction markets are not simply a way to uncover information. They also encourage intellectual humility and civil discourse, and I don’t believe it’s outside of the realm of possibility to believe that they can play a major role in healing our fractious politics.

Richard Hanania

President, Center for the Study of Partisanship and Ideology

Research Fellow, University of Texas, Salem Center

After I joined the website, they gave me a custom link, where if you click on it and sign up I get $10. If you make 100 bets, you’ll also get $30 yourself. Consider it a contribution to the Substack, particularly if you’ve enjoyed it but never thought to donate. Please use the link instead of just going to the website directly so I can get paid. I’ll take whatever money I make off the Kalshi link and put it back into betting markets.

Another advantage of Kalshi is that its fees are much lower than for PredictIt. Unfortunately, the two things I feel most comfortable betting on are American electoral outcomes and geopolitical events, and Kalshi doesn’t do either of those as of yet.

Here’s a table that shows my dilemma.

A lot of the questions at Kalshi are about stuff like inflation and GDP growth, where I don’t have any reason to think I could beat the market. Fortunately, they also ask about Supreme Court cases, the fate of proposed bills, and executive orders, so I’ve been able to bet on some things that are closer to my core interests. Here’s what my portfolio looks like so far.

The trade volumes currently seem very small. When I first went to the site, it gave a 68% chance that the Supreme Court would ban the use of race in college admissions. I spent $500 on that market, and by myself got the number up to 72%.

I have a public figures page on Metaculus, but honestly it’s hard for me to find the motivation to keep up with it given that there is no money involved. Manifold Markets has the same problem. My time is valuable enough that to induce me to keep up with a prediction website I need both money and the chance to be able to test my forecasting ability. One of these things tends not to be enough.

Last time I reviewed my portfolio on PredictIt was May 2021, when I reported I had turned $15,700 into about $39,000. Of that, I had taken out $10,000, for a portfolio value of $29,000 at the time. Since then, I’ve withdrawn another $4,000, and my portfolio is at $27,500, which means I’ve gained about 12% in the last year. I took a killing on Cuomo, who I believed would hold on to power. But my predictions for 2024, where I’ve always said it would be Trump and Biden, have held up well.

A year ago, I put Trump at a 75% chance of winning the Republican nomination in 2024, when the market put him at 26%. The market is actually now giving him a 38% chance, while I’ve decreased my forecast to 65%. I always thought the only chance that Trump could lose would be if one candidate could consolidate the anti-Trump vote. It’s looking more likely now that DeSantis is the obvious choice. A series of polls show Trump continuing to lead the pack, but DeSantis within 20 or 30 points or so and, more importantly, clearly ahead of everyone else. Part of the difficulty in stopping Trump in 2016 was there wasn’t a single alternative that everyone could get behind from the beginning. DeSantis is clearly more popular with conservative intellectuals and activists than any other candidate, and is a more likable politician than Cruz, Pence, Pompeo, or anyone else who may run, unless maybe Tucker decides to jump in. So my current Republican forecast for 2024 is Trump at 65%, DeSantis at 30%, and everyone else at 5%.

Even more incredible than the extent to which markets underestimate Trump is their underestimation of Biden. Since World War II, there have been 14 elections where a sitting president was eligible to run for another term. In 12 of those cases, the sitting president was the nominee of his party. The only exceptions were Truman in 1952 and Johnson in 1968, and these were very unusual cases in that each of them would have been running for his third term. The 1968 Democratic nominee ended up being Hubert Humphrey, who had been Johnson’s vice president. Therefore, in situations where a sitting president was eligible to run again, we have him getting the nomination 86% of the time, and the nominee of his party being either the sitting president or vice president 93% of the time. If we limit our analysis to post-1968 – on the theory that the more recent past is a better guide to the present than the distant past – a sitting president who has been eligible to run again has been the nominee of his party 10 out of 10 times.

So what do betting markets say this time? For the Democratic nomination, they give Biden a 35% chance, and Harris a 17% chance. Betfair isn’t that different from PredictIt, so it’s not an issue of limits on contracts. In other words, there is supposedly only a 50-50 chance that either the current president or vice president will be leading the Democratic ticket in 2024. This is insane. Yes, Biden is old, and Kamala is unpopular. So what? The probability of a man at Biden’s age dying is about 5% a year, but that includes those in nursing homes, people in a vegetative state, etc. There are no credible reports of Biden having serious medical issues, and no indication that he doesn’t want to be president anymore. I’m sure that if you calculated the odds of incapacitation or death for people serving as politicians at Biden’s age without any current health problems being discussed in the media, they would be quite low.

So maybe because of the age issue you adjust from the base rate a little bit, let Biden go down from the historical norm of 86% to say 75%. And then you give Kamala a 50% chance of being the nominee in the case it isn’t Biden based on the recent historical sample size of 2. That gives you an 87.5% chance that the nominee will be either Biden or Harris, and reasonable people can maybe disagree and adjust that number down to 80% or even a bit lower. But Biden and Harris combined being at 50%? There’s no way that can be justified. “Stick close to the base rate” is such a boring heuristic, as it’s much more fun to imagine some kind of Democratic implosion that sweeps aside both Biden and Harris and they all draft Oprah or The Rock to save them.

The market, by the way, made a similar mistake with Trump in 2020. I remember that months before the Republican convention, he was only given around a 75% chance of being the nominee. And some people kept expecting Biden to drop dead that year too. So base rates seem to be something markets don’t really understand yet when it comes to politics. I expect this problem to be solved in the long run.

If it’s not Biden or Harris, I’ve always thought that Stacey Abrams was the most realistic alternative. David Sacks thinks that Gavin Newsom has a shot, but try and imagine the modern Democratic Party taking the nomination away from a black woman who is the sitting vice president and giving it to a white guy instead. Abrams is the only individual who has the right characteristics to take the nomination away from Kamala, and makes sense as a high-risk/high-reward strategy for the Democrats if things continue to look bad for them in 2024.

Right now, I’d say the Democratic probabilities are 80% Biden, 15% Harris, 2% Abrams, and 3% other.

I’ll continue to use PredictIt, and I’ve also put $6,000 into Kalshi. Expect more updates on both portfolios as time goes on. Again, I encourage you to join Kalshi through this link so I can get $10 per sign up and keep gambling to ensure that I still know what I’m talking about.

Note: I’ve added a Substack heading under which you can find all my previous forecasts and writings on prediction markets.

He argued that the Russian convoy north of Kiev was in deep trouble for tire-related reasons. I am not a tire expert. Is there truth to what he is saying? If so, can Russia fix the problem?

To be honest with you, I have no idea. In order to forecast the outcome in Ukraine, maybe I need to do the work of spending a day or so learning about tires since that’s going to be the determining factor in whether or not Kiev falls. Or maybe it’s a waste of time and what he’s saying isn’t even true or it’s true but not that important in the grand scheme of things. I have no way to decide.

Here’s another thread on the nature of globalization and why Russia can’t produce anything that is on the technological cutting edge from Kamil Galeev. The part on why mafias control relatively simple businesses instead of complex ones makes sense. But Galeev also has a theory about Russian elite behavior, claiming that complex scientific and technological industries empower nerds, and brutes like Putin, FSB types, and the guys who run the energy industry are too stupid to do those things themselves and won’t let smarter people do them because they would then lose power to the nerds. For simple brutes, this seems like a pretty complicated and far sighted way to stay in control. And it strikes me as highly unlikely to be true, as authoritarian governments have shown themselves able to let industries grow without giving them political power. That was Putin’s deal with the oligarchs in the first place, so why can’t he do the same with the Russian version of Zuckerberg?

Does Galeev’s thread have any relevance to the ultimate outcome of the war? I know little about whether Russia can undertake a successful scheme of import substitution. Galeev says they can’t, and he seems smart and sensible, but then he has a theory about Russian elite behavior that I think sounds sort of absurd, and maybe that means he’s biased and I can discount whatever he says about the state of Russian industry. I’m not sure.

Now I think you can see why forecasting the outcome of a war is so difficult. My process in this conflict has involved looking at a lot of maps, reading a lot of articles and Twitter threads, seeing various arguments, and deciding “This looks right, this looks wrong, this looks probably true but not nearly as important as the author implies. This author seems credible but is saying crazy things, while this one seems crazy but is making sense.” I don’t have the time to look into every plausible theory of how the war will end or what the determining factor will be. Maybe it’s all about tires. Or a thousand other things.

This is something of a problem with forecasting as a general matter. But although forecasting almost anything worth debating is difficult, war is probably in its own special category. The sample size of previous conflicts is large if you go back far enough, but the world changes and it’s unclear how much guidance we can draw from past centuries. There are too many known unknowns, and unknown unknowns. If you ask me to predict what’s going to happen in the next presidential election, I can take a few inputs like the outcome of recent elections, Biden’s approval rating, who the Republican nominee is likely to be, etc. and give you a pretty decent guess that will resemble what ends up happening in the real world. I think it’s most likely going to be a close election with Republicans winning, with my second guess being a close election that Democrats win. I can promise you that neither candidate is going to win 40 states. If you ask me what US GDP growth will be in 2023, without any economic training I’d say something like 3% since that’s what it is pretty much every year with a few exceptions.

But when Putin invaded Ukraine, every possibility was on the table from “Ukraine collapses like the Afghan government did in August, Putin becomes the greatest conquerer in a century” to “Russian tires all get stuck in the mud and it becomes an international laughingstock, sparking internal turmoil and the removal of Putin.” The result has been something in between those two extremes. And every war is similarly unpredictable, which is why even smart leaders can convince themselves to take radical gambles that seem insane in retrospect.

All of this means that I have low confidence in my predictions for how the war in Ukraine will turn out. Nonetheless, I don’t think my methodology is that bad compared to how other people are approaching the topic, and making clear how I’m thinking about it can therefore contribute to the public discourse. Moreover, if I’m going to make policy suggestions about what the US should do, it is useful to explain the empirical beliefs I am starting with and how I’ve arrived at them.

My method of forecasting generally involves seeking out a few big facts that others are ignoring or downplaying. Here are the ones that jump out at me regarding the eventual outcome in Ukraine.

1. Ukraine is really important to Russia. Not just Putin, but Russian society. Countries have taken serious casualties fighting for places that mean nothing to them, like the US in Vietnam and Russians in Afghanistan. Looking back in history, it’s amazing how pointless the things are that countries will die for, even from a perspective that takes into account their own national myths. Two great powers shed blood over Indochina in the second half of the twentieth century? Incredible (three if you count Deng’s China, but at least it was a neighbor). Once they’re invested in a war, leaders don’t like giving up, and this is especially true when the territory they are fighting over has great significance in terms of cultural symbolism or security, whether real or perceived (again, Deng gave up on Vietnam quickly, but he was an unusually brilliant head of state). Leaders find it too embarrassing to quit wars they’re involved in, and the masses tend to listen to their leaders during wartime no matter how little they’ve done to deserve their trust. When I say Ukraine is “important” to Russia, I mean it in a subjective sense. You can argue that the average citizen in Moscow should just want good healthcare and a higher GDP and not care what happens in Kiev, just like you can argue that the North would’ve been self-interested to let the American South secede in 1861. But the psychological attachment that Russia has towards Ukraine appears real and central to Putin’s ideology, and this has to be taken into account when we are trying to forecast what is going to happen. The sacrifices that Russia is going to have to endure in order to win in Ukraine will of course be higher than what American society had to suffer through in Vietnam. Yet it strikes me that the difference in the subjective importance of each war is greater than the difference in sacrifice between the two conflicts, even if the latter is very large.

2. Authoritarian regimes can survive economic collapse and continue in their war efforts. Syria is a recent example of this. The country has been immiserated due to war and sanctions and cut off from the rest of the world. But the government ended up taking back all major population centers in the country and would likely have all of it if not for continuing outside intervention. Yes, it has had Russian and Iranian help, but it has also faced economic blockade and the opposition of the West and its neighbors. Sometimes economic crisis and war do lead to regime change, as in the case of the Romanov dynasty. But modern authoritarian regimes seem a lot less brittle than a European monarchy from the early 20th century. I saw a Q&A with Stephen Kotkin where someone asked him a question I always wondered about, which was that if Stalin was so dangerous to the Tsarist authorities, why did they keep arresting him and letting him escape? Kotkin basically replied that it was all about incompetence and lack of state capacity. The government would pick up young Stalin, send him to Siberia, and then basically forget about him. With modern communications technology and larger and more capable governments, that kind of thing seems to happen a lot less.

3. No one doubts that Russia has the military capabilities to flatten Ukraine.

4. Pundits and analysts seem to be in denial. For all the problems of the Russian military that they’re talking about, every time I look at a map it is gaining territory. Progress on the ground has not been slow by historical standards. Maybe the pundits are right that eventually the supply lines will become too long and they’ll overextend themselves. But I don’t think at this point you need to occupy cities. I don’t see any Ukrainian defense against simply blockading them indefinitely until the diehards like the Azov Battalion are killed and everyone else surrenders. The tendency of pundits and analysts to exaggerate how badly the Russian military campaign is going makes me think they’re engaging in wishful thinking, which leads me to discount much else of what they say.

Every forecaster must reduce a very complicated and messy reality to a few fundamental components, and here I think the keys are capabilities and resolve. Sanctions could in theory prevent Russia from being able to wage war, but I suspect that Moscow would prioritize the effort in Ukraine over anything else and find a way to keep the war going up until it achieves something that looks like victory. If North Korea can maintain a formidable army, I suspect that Russia can too no matter how bad sanctions get. Maybe Russian manufacturing is different because it’s just becoming isolated while North Korea has always been alone and had to rely on itself. Maybe the psychological factors at work are different, as North Koreans never had access to McDonalds and the PlayStation Store and so they don’t miss them. This is possible, and unknown factors like these are why I give Ukraine any chance of victory at all. There’s nothing resembling a perfect historical analogy we can use to guide us, or even a very good one. But in the end, it seems to me that Russia only loses if it is forced to admit failure as it fundamentally rethinks what its core interests are – more precisely, what Putin considers important in terms of his own survival, ideology, legitimacy, legacy, etc. – and I’ve already written about why that’s unlikely. I keep trying to play the scenario out in my head as to what a Russian loss looks like and it’s hard to see it.

Based on the arguments above, I break down the likely outcome of the war in Ukraine in the following way.

Russian victory: 70%

I’m defining “victory” here in the sense that Russia is better off than when the war began regarding its key foreign policy aims. It either has more land or territory under its control than when the war started, gets international recognition for what it already controls, i.e. Crimea, changes the status of the Donbas, or gets a no-NATO pledge or some other guarantee of Ukrainian neutrality, whether it can be enforced or not.

The most likely scenario here is Russia forces a settlement on Kiev that involves most of these components (35%), but it sticks to changes to Donbas and Crimea and exits the rest of Ukraine. There’s also a good possibility that Russia will grab even more territory in the eventual settlement, say parts of the Black Sea coast and Kharkiv too (25%). It’s hard right now to see Ukraine or the West agreeing to any of this, but consider how unthinkable it would have been after 9/11 to believe that the US would let the Taliban ever rule Afghanistan again. Eventually, passions cool down and people accept military realities.

Annexation of Kiev or all of Ukraine still cannot be ruled out (10%). I checked with Anatoly, and he still thinks Putin is going for it all, arguing that this looks like a traditional European war so far where the challenge is destroying the conventional army and then there is a very limited insurgency. He points to the lack of guerrilla war in areas that have been conquered so far, though obviously it’s very early. I think the maximalist scenario would impose massive costs on Russia, but it may well be willing to push forward, especially if there is no off-ramp for sanctions and a big military victory serves as a way to psychologically compensate for international isolation and economic collapse. Note that all Russian victory predictions are compatible with Putin being overthrown in a palace coup since there’s no guarantee that whoever replaces him won’t be just as or even more committed to the war effort.

Draw: 15%

In this scenario, Russia continues to claim Crimea for itself and Donetsk and Luhansk are de facto independent if not annexed by Russia but Ukraine never agrees and otherwise maintains its independence. Eventually everyone just gets tired of fighting and tells a story as to why they won. This is the Korean War model, but the dividing lines will be less official. There is no clear understanding of whether Ukraine will eventually join NATO or not. In the future, we perhaps see another war, or both sides end up so war weary they decide not to do anything that provokes or starts another conflict.

Ukrainian victory: 10%

As in the case of Russian victory, I’m defining a Ukrainian victory as one where that country is in a better position regarding the main issues of the war, that is the Donbas, Crimea, and NATO. This is basically the scenario that Washington fantasizes about. It would take quite a catastrophic collapse in Russia for this to happen, and even then it would have to be a political choice since the country still has nuclear weapons and can use them even if it has nothing else. Even if Putin falls over the course of the war, which I’d put at 10-20%, there is no Lenin waiting in the wings ready to give up wide swaths of territory at any cost in order to achieve peace. One reason US policy is so frustrating is that it seems to be putting a lot of stock in this outcome, and I think it’s unlikely. But again, war is extremely unpredictable, so I do have to give a Ukrainian victory something of a chance.

Larger war with NATO: 5%

This would likely also end in a Ukrainian victory if it stayed conventional. If it goes nuclear I hesitate to say much of anything about what might happen.

This is the way I’m currently thinking about the conflict, and I’m open to other approaches and arguments. For my Metaculus predictions, see here. Feel free to make your own predictions there. See also my previous article on earlier predictions from before the war started.

Note: This essay is crossposted at the Metaculus Journal.

****

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Before getting to that, it’s worth going back to how I thought about the fall of the Afghan government. Last May, I gave a 55% chance that the Taliban would take Kabul by the end of 2021. Metaculus was giving the same event a 60% chance of happening by 2026 up until a week before the city fell. Even that estimate was high relative to the impression one would have gotten from reading foreign policy experts, who are not as smart as the Metaculus crowd, which is why Biden embarrassed himself by promising that the government could stand on its own, at least long enough for Americans to get out of Afghanistan and forget they’d ever been there.

My logic was simple. The Afghan government had the strongest military in the history of the world subsidizing it and fighting on its side, and it still had been losing territory for years. Once that support was removed, the whole thing would prove to be a house of cards. The old regime had the trappings of government: a parliament, cabinet ministers, a seat at the UN. It had press conferences, and American generals went before Congress singing its praises. It even had a law criminalizing sexual harassment. None of this meant it could fulfill the basic functions of statehood. It’s incredible to think that the US could sacrifice so much blood and treasure and have so little to show for it. But the fact that the Afghan government was losing even with American support should have led one to discount other kinds of information supposedly relevant to what would happen after US withdrawal. Even though I had studied the conflict pretty closely, it didn’t require much additional knowledge on top of that fact to predict the eventual outcome of the Afghan Civil War. The only reason I didn’t think the odds of collapse were even higher was due to the political uncertainty involved, as there was no way of knowing whether Biden would stick to the withdrawal plan regardless of circumstances.

My reasoning was similar when it came to thinking about a potential Russian invasion of Ukraine. I thought that there were difficult realities others weren’t facing, namely that Russia had overwhelming military power over Ukraine and it was in a tough security situation due to NATO expansion and deepening military ties between Kiev and Washington. Probably overlearning from Afghanistan, I thought an American client state without a strong conventional army of its own would fall relatively easily. I therefore predicted the Russian invasion (correct) and a quick collapse by the Ukrainians (wrong).

It was in early December that the American media started reporting on a Russian troop buildup on the Ukrainian border that journalists and US intelligence officials claimed could be the precursor to a massive military offensive in early 2022. While many who are skeptical about US foreign policy as a general matter weren’t buying the intelligence, the following three articles made me believe that something serious was probably going to happen. They’re each still worth reading for understanding how we got to this point.

Adam Tooze. January 12. Putin’s Challenge to Western Hegemony. Making the case that Russia was getting ready for conflict and explaining recent developments in Ukraine towards joining NATO.

Rob Lee. January 18. Moscow’s Compellence Strategy. Explaining developments in military technology and why Russia had good reason to think that if it did nothing Ukraine would be better able to defend itself in the future.

Anatoly Karlin. February 15. Regathering of the Russian Lands. A Russian nationalist perspective, which helped me understand the human capital case for seizing Ukraine, which might have appealed to Putin. Also made a convincing argument that going halfway – i.e., recognizing Donetsk and Luhansk and stopping – would have been the stupidest policy of all.

Assuming that Putin was a rational actor, together these articles made a convincing case that he would go to war and he would go big.

I had written on why I thought there wouldn’t be an insurgency in Ukraine, which if my arguments were sound would have removed another reason why one might have expected Russia to think twice before invading. People talk about the American and Soviet wars in Afghanistan illustrating the dangers of occupation, but I thought this would be more like Syria, where Russia succeeded because it had effective partners on the ground, was willing to use as much force as necessary, and did not try to engage in social engineering. My thinking was that this wasn’t a US invasion, where troops are sent to the other side of the world to build girls’ schools for 20 years and form an entirely new society among people they know nothing about. Russia would be replacing a pro-American oligarchy with a pro-Russian one, either through installing a puppet regime or outright annexation. And it would be fighting to win a war, not provide jobs for NGO types or give politicians sound bites. That was my thinking at least, and this theory turned out to be mostly wrong, at least in its more extreme form. But it looks like Putin might have bought into the same logic, which is why he has invaded Ukraine and made some otherwise puzzling decisions along the way, like not fully utilizing his advantage in the air.

I started posting my predictions about the likelihood of an invasion by the end of 2022 and comparing my forecast to the median at Metaculus. Here is the thread. Starting at the beginning of the month, I was consistently around 10-20% above other forecasters.

Feb. 2: Metaculus at 49%, Me at 65%

Feb. 16: Metaculus at 60%, Me at 78%

Feb. 19: Metaculus at 76%, Me at 90%

Feb 21: Metaculus at 83%, Me at 95%

I’m proud of my record forecasting the invasion, given that it went against most of the predictions of those who generally share my foreign policy views. Anyone can occasionally be correct by following the same heuristic they always use, but I showed intellectual flexibility here by determining that American intelligence was likely correct. Karlin is the only other prominent US foreign policy skeptic I know of who thought war was even more likely than the conventional wisdom suggested, and he deserves credit for that (if you know of others, mention them in the comments). Part of the reason I came to the right conclusion was that I was even more pessimistic than most anti-interventionists were about the degree of rationality present in American foreign policy. For example, my friend Max Abrahms was saying until very recently that Putin was hoping for some concessions that would allow him to avoid war (to be fair, Max has been more correct than me on the invasion running into difficulties). I thought that was possible too, but I had little hope that American politics would allow Biden to strike a deal. When it became clear that negotiating over the NATO open door policy wasn’t even on the table, I increased my estimate of the probability for war. To his credit, Max has admitted I was right, as have others I’ve been texting with over the last few months. I also give credit to Saagar, Philippe, and Michael Tracey for publicly acknowledging mistakes.

As I’ve said before, “trust the experts” and “don’t test the experts” are both bad heuristics (see the Substack article and its NYT version). Talking to anti-interventionists about the potential for a Russian invasion throughout January and February, I was struck by how often they would ignore my arguments and instead say things like “this guy has always been right, so I’m going to trust him.” That might be an adequate strategy when you have nothing else to go on, but here we had a lot of evidence relevant to what was likely to happen, including satellite imagery of military movements and reports on the state of diplomatic negotiations. I’ve found one of the most insightful analysts throughout the crisis to be Dmitri Alperovitch. But when I shared one of his tweets with a very intelligent friend of mine, his response was basically “his profile says that he is affiliated with Crowdstrike, which was involved in the Russiagate hoax. How can we believe anything he says?” I can understand the reaction, but it seems like this kind of thinking led many intelligent observers astray.

Regarding the prediction that there would be no insurgency, it is not technically false yet, since the conventional phase of the war is still ongoing, but I have to be honest and say that I expected a lot less fighting than we’re seeing. As already mentioned, I thought it might be like the fall of Kabul, where the weaker side just melted away even if it could’ve theoretically held out longer. But the Afghan government was probably uniquely bad, and the fact that it performed so poorly didn’t mean that Ukraine was a fake nation or that no one would fight for its government. A clue should’ve been that, although the Afghan government was losing territory even with American support, Ukraine had been doing an adequate job in its own defense since 2014 and holding its own in the war in the Donbas.

My argument that Ukraine did not have a high enough TFR to tolerate the casualties required for an asymmetric conflict may well have been motivated reasoning, based on my view that not having enough children is a sign of moral and spiritual decline. We’ll see soon enough if the view was well founded or not, as a Ukrainian collapse is still possible, even if it takes longer than I would have thought. Similarly, a source of wishful thinking here might have been my suspicion that, if there was a more sustained conflict, it would mean a great deal of Western involvement, which would raise the risk of nuclear war.

I also didn't anticipate the strength of the Western response. In part, this was because of how American and European leaders talked before the war. If you were going to cut Russia off from SWIFT, for example, why wouldn’t you announce it beforehand? The whole point of a punishment like that is supposed to be its deterrent effect, but if you don’t communicate that a specific action will happen, then it can’t influence behavior. The answer here seems to be a lack of grand strategy, with leaders responding to events according to emotion and public relations more than anything. Cutting off SWIFT, or even threatening to do so, seems extreme before an invasion occurs, but not after it has begun. This kind of irrationality is something I should’ve anticipated, given I wrote a book in which the main argument was that this is exactly how politicians behave.

Now, we shouldn’t get ahead of ourselves, as Russia is still making rapid progress. It took the US three weeks to take Baghdad, and as I write this we are still less than 5 days into the invasion of Ukraine and fighting has reached the capital. This might still work out for the Russian government, if not its people, if it takes Kiev, is willing to absorb the economic fallout, and then potentially negotiates from a position of strength as the US and EU face their own economic problems resulting from high energy prices and retaliatory sanctions. But even a “successful” war is going to cost a lot more than I thought it would in blood and treasure.

For what I think is going to happen from here, I’m participating in the Ukraine Conflict Challenge at Metaculus and posting my predictions as time goes on in this Twitter thread.

On what actions the parties to the war should take now, the way to settle this conflict is still the same as it was before the invasion. Russia has security concerns, and Ukraine and the United States need to take them seriously. The only difference now is what we’ve learned since the start of the war, which is that the Russians are willing to take radical gambles and suffer large costs to address their concerns, and the Ukrainians can defend themselves and together with the US and Europe make the costs of military action even higher than anyone expected. Since neither side can be dictated to, now more than ever the answer is a negotiated settlement both can live with.

One potential problem here is that a no-NATO pledge is hard to make enforceable, and the same is true of any promise that Russia won't invade again. Yet if the two parties can make an agreement for the sake of psychology and public relations, each can hopefully trust that the other realizes how stupid it would be to try this again. I would guess that political considerations will make this outcome impossible in the short run, but eventually that’s the deal we’re probably going to end up with at one point or another. The sooner it happens, the better. As for the alternative, Metaculus gives a 4% chance of a nuclear detonation causing at least one fatality by 2024. I’m at 2%, but those odds are still too high, and getting them down should be the main goal of foreign policy.

I began betting on politics in fall 2018. Since that time, I’ve invested $15,700. I’ve taken out $10,000, and the current value of my portfolio is now approximately $29,000. This means that I have so far made 2.5x my original investment, which makes me feel pretty good about myself. This underestimates how well I’ve done, as PredictIt takes 10% of your winnings. That’s 10% of each successful bet you’ve made, not 10% of your net profits, making it more impressive. (i.e., imagine you win $100. They then take $10, then if you lose $100, you’re down to -$10 in net profit, and then if you win $100 again, they take another $10, and you’re only up +$80. So you’ve won $100 twice, and lost $100 once, but instead of your total payout being $100 or $90, it’s $80. You need to consistently beat the market just to break even)

PredictIt is a good way to keep track, because you’re either in the black or red.

So what’s happened since then? As mentioned in the quote above, in the spring I had a portfolio worth around $29,000. I’ve withdrawn $4,000 from my account, and the current portfolio value is $27,100. This means that if I’d kept that money in, I would have been at $31,100, meaning I’ve still been beating the market.

My two big electoral predictions – that Biden and Trump would be the nominees in 2024 – are holding steady or looking better. Trump has gone from 26% to 40%, and Biden is still practically unchanged at 38%. It’s not just PredictIt that’s underestimating Biden and Trump, as Election Betting Odds reflects even less faith in them elsewhere. In other words, this isn’t because PredictIt has an $850 limit on contracts. I also thought Cuomo would survive in New York and took a beating on that.

The problem with continuing to rely only on PredictIt for this is that it’s mostly about American politics, while I would like a mechanism to make predictions about other things.

A friend recommended I try Metaculus and keep track there. The problem here is there’s no simple metric that can tell me whether I’m doing well or not, like the black/red distinction on PredictIt. Metaculus gives you a Brier score, and here’s an explainer of what that is.

So if I predict for example that something will happen with 80% probability and it does, then for that prediction I get (0.8 - 1)^2 = 0.04. If it doesn't, then the contribution of that question is (0.8 - 0)^2 = 0.64. In the version of the Brier score from Metaculus I will use, your score is calculated based on your prediction when the market closes, with most markets closing well before they’re decided. The score goes from 0 to 1, with lower obviously better.

But there’s no clear measure of what a “good” or “bad” score is. Ideally, you want to be able to make a chart that looks like a better calibrated version of the one below, which reflects the predictions of the Metaculus community.

The website seems to overestimate the probability of low probability events, and slightly underestimate the probability of high probability events. In other words, up to this point you could have beaten the crowd on Metaculus by finding things with less than 50% probability and judging them even less likely, and finding things at over 65% probability and giving them slightly higher odds. But overall, the market seems to know what it’s doing when it moves away from long-shot events, and is infinitely superior to punditry, where people just make things up. It would most certainly be much better if it allowed actual money, and the calibration chart looks better when weighted towards the predictions of the most accurate forecasters.

I’m told that when you make enough predictions, you not only get your Brier score, but also your own personal binary calibration chart like the ones above, and eventually I’ll be able to use that to eyeball how I’ve been doing.

So I will keep using PredictIt and reporting how my portfolio is doing, while also working off of Metaculus to test my knowledge about broader geopolitical and other kinds of issues. In the rest of this post, I’ll start with what I think is one of the most important questions facing humanity, move on to other predictions, and then explain what I’m doing on a new website called Manifold Markets.

Chinese Fertility

A week ago I sent out the following tweet.

This inspired a Metaculus question on what Chinese TFR will be in 2031. China has consistently embarrassed western pundits, having become, depending on how you measure, either the largest or second largest economy in the world, without having to undergo political liberalization. Its growth has been on a historically unprecedented scale, based on manufacturing and unusually high levels of technological innovation, while the state has also maintained internal peace and security, whatever we think of its methods for doing so. I’ve written on these themes in a report for Defense Priorities. The American discussion about the rise of China has been a series of copes: the economy is going to collapse, people will demand democracy when they get rich, COVID will end the CCP, America can stop them if we cut off trade and technology transfers, etc.

Recently, I’ve noticed a rise in a new kind of Sino-pessimism that goes along the lines of “sure, our pundits were wrong in the past, but Chairman Xi is stupid and has lost his mind.” Maybe he has, but it’s still too early to say that. Here’s a tweet thread I wrote in response to a Tyler article on the topic.

And, just to demonstrate a common phenomenon, here’s a recent cope from Lyman Stone, who points out China’s GDP per capita is the same as Mexico’s so it’s not really that impressive, without noting that the latter was something like 15 times wealthier in 1980.

But while most China analysis is cope, those who see trouble on the horizon due to low fertility may be on to something. Population size is a fundamental determinant of economic vitality, geopolitical power, and societal health.

And China is getting serious about turning around its fertility problem. What are its prospects for success? The pessimistic case goes like this: practically all countries experience declining fertility as they get wealthier. This is particularly bad in East Asia, where they have the lowest birth rates in recorded history. China had the disastrous one-child policy and artificially depressed its birth rate early, and there’s no reason to think they can turn it around. Removing the one-child policy has not led to any increase in births so far, though it’s early. This is what Anatoly Karlin says, and I usually agree with him on most things.

My argument in response has three pieces: 1) fertility is largely a cultural issue, not simply an economic one; 2) the Chinese government is very competent; and 3) it has the tools to fundamentally change the values of society and the willingness to use them. On the first premise, let’s look at fertility rate by religious affiliation in Israel as of 2017.

Basically, people living in the same country can have massively different fertility rates that can’t be explained by economic differences. You’ll never find data like this between social classes, showing that a group with one income has 3-4x the birth rate of those of another income, unless you slice economic bands quite narrowly, and even then it’s usually still the cultural, religious, or ethnic confounders that seem to have the causal effect. Unquestionably, economic development matters too, and there is a trend toward lower fertility as countries get wealthier. But there can be a lot of variation within a country or socioeconomic group, and that must be due to culture.

So we can reject the simple version of economic determinism. This view puts a lot of stock in the fact that other countries have tried to increase their birth rates with little success, and we can reference Lyman Stone here again. Yet I don’t think that what democracies, or even soft authoritarian places like Singapore, have been able to do tells us much about what is possible in China.

To understand why, imagine people are trying different weight loss plans. A tries doing a lot of cardio, B tries weightlifting and C does both. Nobody ever cuts their calories, which is the most important factor in losing weight. Some social scientist comes along, runs the data, and says losing weight is impossible! This would be a pretty bad social scientist.

Fertility research is a lot like that. Broadly speaking, once a country reaches a certain level of development, culture seems to be the most important determinant of fertility, both within and across nations, and few states have shown the willingness and capability to fundamentally shift culture in a pro-natalist direction (Israel and Mongolia seem to be notable exceptions, though no one as far as I can tell knows anything about the latter. My pet theory is that the memory of Genghis makes them feel virile, which I like so much that I don’t think I want to hear any other explanation). Sure, some make halfhearted efforts in that direction; see the “Do it for Denmark” campaign, and South Korea’s creation of a map of fertility by region, which led to a backlash from feminists that caused the government to back down. Yet these are drops in the ocean, and for most governments I’m sure that pro-natalist messaging coming from the state is more than drowned out by feminist and anti-natalist messaging, mostly produced by the education system.

China can simply do away with certain words, phrases, and concepts. It can tell people to believe certain things and not others, and shut down entire industries that get in the way of what the state wants to accomplish. The wars against feminism, effeminate men, excessive studying, and video games can be seen in this context, and we should at least wait some years to see what happens to the fertility rate before listening to western pundits declaring these to be foolish policies. China can also coordinate in a consistent way across various parts of the government, and not be like South Korea, with some officials within the state encouraging higher birth rates and others running something called the “Ministry of Gender Equality and Family”. Not that culture in South Korea depends more on government policy than television dramas and K-pop anyway. By focusing on economics, everyone else is trying cardio, while China is going to cut calories.

This is to a large extent speculation. Do we at least have any precedent of an authoritarian state actually being able to brute force its way to a higher birth rate? I give you communist Romania:

In 1966, Romania’s TFR was 1.9. In 1967, it was 3.67. While it came down almost immediately, Romania still had a higher TFR than its neighbors into the early 1980s, despite starting lower than most of them. I’m not an expert on how this was done, but I understand it was not something anyone should want to emulate. Still, I’m here to make predictions, not pass moral judgments, and we at least have proof of concept that a rapid and substantial rise in fertility is possible with an authoritarian government.

Of course, modern China is not 1960s Romania. It’s less rural, more economically developed, and more connected to global culture, which can be bad for fertility. On the other hand, China has more resources to throw at the problem, modern communications technology that can be put towards propagandizing the state line, and a more competent government, which includes a developed and effective censorship apparatus. Moreover, the measures Beijing has taken to deal with the threats of Hong Kong and Uighur separatism, along with its so-far (maybe not for long) successful Zero Covid policy – again, these are comments on effectiveness, not moral judgments – indicate that the Chinese government is willing not to be restrained by human rights norms when they conflict with state policy. Although I think the tradeoffs no longer make the current policy worth it, I don’t think we’re nearly impressed enough with how China has handled COVID, especially given that they went first and everyone else had at least some warning of what was coming.

How do all these factors balance out? I’m not sure, but I lean on the side of optimism. Smart people disagree, and it will be very interesting to find out who is right.

I hope China does not follow the path of 1960s Romania, but I do hope it can find some path out of the death spiral modern societies find themselves in.

State media reports that Chinese TFR has dropped to 1.3 during COVID-19. My prediction for 2031 is 1.9, with a 50% confidence interval of 1.6 to 2.3. Not many people agree with me, as the Metaculus community has it at 1.4, just barely above the current rate, with a range of 1.2 to 1.7. Because of the importance of this question, and the fact that I disagree so strongly with others, it’s worth highlighting my prediction.

There’s also a question about Hungarian fertility in 2031 (currently around 1.5). I think having a government that cares about the issue and propagandizes on it matters, but I wouldn’t be as optimistic as I am about China. I’m predicting 1.8, which is about similar to what I think China will be in 2031, but with a smaller range. I’m pretty close to the consensus on this one, just slightly more optimistic.

Other Predictions

Here are some other predictions from Metaculus, broken up by American and international. Note that “by/before year X” means by the end of the previous year, so “by 2031” means “by December 31, 2030,” not the end of 2031.

My relative optimism about Republicans winning in 2024 is that I think by becoming so completely a TV watchers party they’ve mastered electoral politics, especially when they’re in opposition and can’t be held responsible for anything. Being able to get away with saying anything because your base doesn’t care about logical consistency or political philosophy is a huge advantage. So is always having a unified message of hatred towards the other side, even when, like in the case of the Afghanistan withdrawal, Biden was just doing what Trump wanted to.

Republicans have been the TV party for decades, but their tendencies have grown more extreme. And in my framework, that’s good for winning elections, even if bad for policy implementation.

The Hanania Prediction Market

A former Google engineer named Austin Chen left a comment on my Reflections on 2021, talking about his new prediction market website, Manifold Markets. He and his co-founders James Grugett and Stephen Grugett just received an ACX grant to work on it.

What’s cool about this site is that it allows anyone to make their own private prediction market and then judge the results. This allows one to draw up subjective questions like “Will there be an elite consensus that the majority of society should return to normal with no Covid precautions by Feb 14th?” It also allows relatively unimportant things that may not matter to a broad audience, like “Will my Sundance trip still happen?”

When you sign up, you get 1,000 Manifold Dollars, which you can’t redeem for cash yet, but which Austin tells me has a “street value” of $10. The site has only been around for about a month, and I’m impressed with how user friendly it is. You don’t actually enter the probabilities of what you think will happen like on Metaculus, you just see where the market is on any particular question and buy “Yes” or “No,” which adjusts the price. You can put money in but you can’t take it out as far as I can tell, though eventually you may be able to. The details are still to be worked out.

Anyway, I decided to draw up a few questions, one China-related to reflect my contrarian Sino-optimism again, and others that are personal. On the China question I started the market at 34%, where I think it should be. For the Hanania-related questions, I’m arbitrarily setting the odds at 50% to begin. I don’t have any specific specialized insider knowledge on any of these, i.e., I have no plans at the moment to go to Washington, D.C., and no op-eds soon to be published in the NYT.

Will Chinese economic growth drop below the upper middle-income GDP growth average in any year before 2031?

Will Richard Hanania have 50,000 Twitter followers by the end of 2022?

Will Richard Hanania step foot in Washington, D.C. in 2022?

Will Richard Hanania publish an article in The Washington Post, The New York Times, or The Wall Street Journal in 2022?

Will Richard Hanania publish at least 70 Substack posts in 2022?

Will Richard Hanania get on Tucker Carlson Tonight at least once in 2022?

If you have any other suggestions, I will be happy to consider them.

The first step towards this glorious future is convincing people that a world where more decisions are made based on prediction markets is desirable and achievable. In that spirit, below is a transcript of our conversation, lightly edited for clarity. To read more about futarchy, see here.

(beginning of transcript)

Richard: Hi, everyone. Welcome to the CSPI Podcast. I’m here today with Robin Hanson. Robin, How are you?

Robin: Happy to be here and ready to talk about a big topic.

Richard: We’re glad to have you. Before we get started, while a lot of our audience is going to know who you are can you just give a brief description of your background? What do you do? What are your research interests?

Robin: I'm an associate professor of economics at George Mason University. I do an excessively diverse range of things. I just had a paper accepted in a astrophysics journal on the Grabby Aliens. I've done information aggregation. I have two books, one called The Age of Em: Work, Love, and Life When Robots Rule the Earth, and the other The Elephant in the Brain: Hidden Motives in Everyday Life. I guess we'll just find out more about my prediction market work in this talk.

Richard: Do you have a degree in economics?

Robin: No. I have a PhD in social science from Caltech. Caltech has a pretty small social science department with say 20 faculty covering all of social sciences. My degree was in social science. The first time I went on the job market I actually did better in political science, but second time I got this job offer in economics.

Richard: Okay. What are your interests? One of the things I think we're going to spend the bulk of the time talking today is the idea of a futarchy. Is that how you pronounce it?

Robin: Futarchy would be a fancy name for decision markets applied to government. The larger topic would be what institutions can we all share to argue and aggregate information so that we can form collective beliefs that we can act on together? That’s a question in academia.

Robin: It's a question in government. It's a question in business. It’s a very fundamental, difficult problem. I think there's potential for doing a lot better than we've done.

Richard: Yeah. What’s the problem? What do you see as the main issue that this is trying to solve?

Robin: Well, you know most of you have been in conversations all your life. You know that in conversations it’s very complicated. People have all sorts of agendas. They aren't entirely honest all the time and they aren't focused on particular tasks. It's not clear you know that you can believe what they say.

A reporter calls up various expert people with credentials or whatever and gets quotes for them, but they don't have a good incentive to tell their best estimate of the truth in those interviews. They're often incentivized to sound provocative, to ally with whatever political tribe they're with, et cetera. We have these problems all over in all the rest of the conversations we have in business, and government, and academia et cetera.

The question is could we give people more direct, better incentives to actually tell the truth and figure out the truth so that when we had a meeting and people raised hands, and we made a decision what to do we would be doing it on the best knowledge we could have?

Richard: Yeah. The way you answered that question, that made me think of something. Do you see this as a matter of incentives in the sense that whoever the experts are they just have to have better incentives, or do you also see it as sort of a selection process in that there is some trait, or collection of traits that humans vary on, and some people are just better at getting at truth than others? Do you take the first position?

Robin: Both of those factors are important, and so you want an institution that relies on both. You don't want to just take a particular group of people and give them better incentives, nor do you just want a process that selects people. You want to both select people and give them good incentives so that people know when they're selected that they will fact those good incentives and they will be selected on the basis of anticipating that those good incentives will work well for them.

Richard: Yeah. Futarchy is the process of aligning incentives to get better opinions, better policy?

Robin: Well, futarchy is decision markets which is an application of prediction markets in general, which is an application of speculative markets in general. We might say we have this general institution of speculative markets, basically stock markets, commodity markets, betting markets, et cetera. They've been around for many centuries.

They have this remarkable property that they often aggregate information very well from a diverse people. The idea of prediction markets is to use that mechanism on purpose to get better information about particular topics of interest, and then decision markets are prediction markets where the topic is directly targeted at a particular decision, where you're asking about the consequences of a particular choice to make those market estimates and advice as directly actionable as possible.

Richard: Yes. It would be an example of futarchy, say if there’s a bill before Congress. It’s a, say stimulus bill, something in the news. You would have some measure of outcome, the GDP of the country in five years if you pass it or you don't pass it. Then basically the system you envision, basically there'd be a way for the legislators to have their votes tied, or whoever makes the decision tied to the results of the market. Is that right?

Robin: Right. I think it’d be easier to start with like a more personal, smaller scale example before we get to reforming national government.

Richard: Sure.

Robin: I would suggest considering, fire the CEO markets. In ordinary public companies there's the CEO. One of the most important decisions that the board of directors makes is whether to keep or fire the CEO.

The proposal would be to have stock markets that are conditional on whether or not you fire the CEO. An ordinary stock market you trade stock for cash, and the price there is an estimate of the value of the company and all the different scenarios it might be in. Now we're going to make called off stock markets and these are markets where we make trades of stock for cash but those trades are called off, or made as if they never happened if certain conditions aren't met.

We could have a ‘if the CEO stays in power through the end of this quarter’ version of the market. In those markets the trades will be based on the expectation of how much the company will be worth if the CEO does stay. Then we can also have markets where the trades are called off if the CEO doesn't leave by the end of the quarter.

Now this will be markets where people estimate, how much is this company worth if the CEO leaves? Then the difference between those two prices, CEO stays and CEO leaves, becomes an estimate of the value of the CEO for this company. That would be direct decision advice. The board of directors could look at that price difference and say, “Should we keep him, or should we dump him?”

Richard: Is there any legal barrier to a company doing this or someone setting up a market like this?

Robin: Well, there is SEC regulations about commodities. This could be thought of as a stock derivative. You need some sort of permission there. That's the main regulation limit. Of course you'd also need the board of directors in the company to be interested in these numbers. That's more the real limitation.

Richard: Yeah. But it seems like you don't need to convince that many people as long as, putting aside the regulatory issue. If you have a corporation, presumably if the system of markets being better than other kinds of decision making is right they should have a huge advantage right, in the market? They should be able to make a profit and their business should do well.

Robin: Our consistent experience with speculative markets is that when we compare them to other mechanisms like polls or committees they’re either about the same or substantially better. They’re almost never much worse. Sometimes the question is just easy, and any mechanism can give you the answer, like is the sun shining right now or something like that right?

Everything will just tell you the answer. But then sometimes things are hard or complicated, and then existing institutions are doing a bad job. In that case the market can cut through and give you a better estimate.

Richard: Okay. I get that. But then the question is wouldn't you just be able to... I mean you should be able to do this and then you can just have a tournament for your CEOs right? You could have 10 different prices right? You can just see the best one…

Robin: Right. This conditional market mechanism hasn't actually been tested out in the world outside of the laboratory tests in that we haven't been able to get people interested enough to try it. We've had a lot of tests of speculative markets that aren't conditional in the sense that we've had markets on deadlines, whether you make a deadline in sales and things like that.

We've probably had 100 different trials like that over the last few decades. Typically what happens is that if there's enough support for the market in order to induce an affectivity then again the price is about as accurate or more accurate than the status quo and most users are satisfied. The costs are modest. That's been the history for many decades.

However a key problem is usually the market gets killed in the sense that an organization says to stop and doesn't continue it. The main reason is that it's relatively disruptive. These markets are politically disruptive. The way they are disruptive is analogous to, imagine you put a very knowledgeable autist in the C suite, that is somebody in the C suite that knows a lot about the company and they go to the meetings. They just blurt out when they know things that it's relevant to the conversation but they have no political savvy.

They have no sense of, what does anybody want to hear, or who will be bothered by anything they say. That sort of an autist would not last long in the C-suite. They would be shunted aside and become an advisor to someone perhaps, trusted advisor to their side but they wouldn't be allowed to speak in the boardroom. But that's what a prediction market is. It has no idea who wants to hear what it has to say.

It will often say things that people do not want to hear, and that embarrass them, and that contradict what they've said. Then all the worse of course it will be proven right.

Richard: Yeah. But what's stopping the autist, or I guess what's stopping them is nobody has just done this yet? But theoretically you could imagine the autist setting up the rules for the corporation, right?

Robin: You might if they were in charge at the beginning sure.

Richard: Yeah. That's what you need. You need one rich autist interested in these ideas. He would go in and he would say the board has to operate according to these…

Robin: Now we move to the question of like, what fraction of companies out there are actually maximizing profits?

Richard: Yeah.

Robin: It’s a very basic question in economics and in our world. We economists tend to assume as a simple initial working model that organizations that are for profit actually do maximize profits. That's the thing they usually do. If you give them a choice of A or B, and B is higher profit they'll choose B.

Here if you apply that model you say, “Well, this looks like it would give them key information to make key decisions like, ‘Will we make the deadline,’ and it will be valuable. The cost is relatively low so of course they would do it.” That's what you would say if you were applying that theory. Then here we have a case where it looks like, well it hasn't happened yet.

You might think, “Okay, innovation is slow. It takes a while,” but we’ve been waiting several decades. Honestly if I look across a wide range of other areas of corporate behavior I can't fully support this profit maximizing theory. I think I can find a lot of other places where what they do does not maximize profits.

I could give you a long list of examples. We could go through some of those but then the question is, “Well, how do I come to terms with it? What theory do I have affirms in the absence of profit maximizing to explain the behavior?”

Richard: Yeah. Well, actually I like the idea of going through the list. Besides not operating according to betting markets what leads you to the position that corporations don’t maximize profit?

Robin: Well, of course until recently we appeared to have too little remote work. Most commenters had though remote work should be much more widely adopted and it hadn't been. We also have the standard story of too many meetings. Almost everyone in large organizations complains there are too many meetings with too many people in them that last too long, yet they keep happening.

We usually have too many people interviewing new candidates as opposed to just looking at their credentials on paper. We often have, when a new person becomes the boss of a group of people usually some of the people they're the boss of they inherited, and some of the people they get to pick. Usually they give higher evaluations to the second group of people and everybody knows that.

But they leave that on the books. We let them do that. There is a standard not invented here bias where we're not so interested in stuff that wasn't invented here compared to stuff that was invented here. There is yes man bias which is of course famously well known that if you're a manager and you’re trying to get people to tell you the truth about things one powerful strategy is to ask them what they think before you tell them what you think, and then use what you think as a way to judge how good what they think is.

Even if you're not very well informed compared to them it still can give them an incentive to tell you what they think because their best guess about what you think is still whatever the truth is. However many managers don't follow this strategy. They very clearly telegraph what they think and therefore induce other people to be yes men, or yes women, where they just parrot and repeat back what the boss said so that not longer produces an incentive for the people to think carefully about what they think.

It instead gives them incentive to parrot what the boss says. These are a half dozen examples here but I have a blog post somewhere where I went through 20 of them. Again we go down the list and we go, “Each one, if it was just one I might say, ‘Okay. I just don't understand that somehow. I'm not looking at it right. Somehow it really is profit maximizing.’” But if I've got a list of 20 of these things and they're big things I go, “Well, I guess I need a better theory.”

Richard: Yeah. Okay. What is the alternative theory?

Robin: I'd say that we want to think of large organizations as fields of battle between coalitions, but that each coalition is fighting for control over the organization, and most of these policies are in the interest of individual coalitions. They're just not in the interest of the organization as a whole.

For example, in a coalition you want lots of your people in the meetings so that they can push for your agenda. It's great if the other people aren't in the meetings, especially if say they're remote working and they can't make a lot of the meetings, so you want the other people to be remote and not in meetings and your people in the meetings.

You want your people to be interviewing new candidates so they believe that they owe you a debt of gratitude if you're hired, et cetera down the list. When coalitions are competing with each other there's policies that help coalitions which isn't so much what helps the company. Related to prediction markets or forecasts most coalitions are organized around a set of shared interests and they form an agreement to support certain projects.

They just don't want their agreement to support those projects to be at risk to fluctuating estimates. Prediction markets will fluctuate right? At the moment it might favor something and then a week later it might change its mind right? That's just not very reliable as a member of your coalition. You want to get together and support George's project, and George's division. Then you want to do that early on and stick with it regardless of how the estimates change.

Richard: Do you think this is what happened? I'm sure you've seen the charts showing for example in universities administrators, the number of administrators are going through the roof and the number of professors is flatter, just barely rising. I saw another one with the same thing with doctors versus medical administrators.

Then someone on Twitter said that chart was no good. I'm not sure if it's good or not, but do you think as a general matter this is what's happening? Perhaps there's this administration bureaucracy that's where this coalition is getting bigger and bigger and it's just expanding because it's optimized for its environment?

Robin: It's not a crazy theory but I haven’t thought that through. The question is if I had a coalition in a university for example would increasing the number of administrators within my part of the university help me win coalition battles against the other ones? If yes, then the theory is predicting that this happens, but it's not obvious that that’s true. But I don't know university administration as well as other people so maybe someone who knows that can comment.

Richard: Yeah. Is this just a matter of it’s when institutions get too big? Does your theory predict that the smaller the corporation, if you have a founder for example, just a founder of just a few people, that they’re going to behave more rationally than a larger corporation that's been around for a while?

Robin: That’s not my theory. That's just very widely predicted. Almost everyone says that small organizations have fewer of these coordination problems. They have other problems. There’s a lot of problems that bedevil smaller organizations. Often it’s just like the leader is arrogant, or blind and has all sorts of just personality issues, etc. Right?

Robin: That tends to be the problem you have with very small organizations is the very personal conflicts. But at least you don't have these larger coalition battle problems.

Richard: This is a problem it seems like. This theory would go... Well, let me ask you this way. What's wrong with the classic free market position that what will happen is you'll have varying degrees of rationality and the ones that are the institutions, and firms, and individuals who are rational will just out compete the ones who are not? What do you see going on there?

Robin: I mean I think in fact the correct response is to say the free market version is probably the best. You just have no idea how much worse things can be. People often look at the status quo of a business world say that is relatively free market. They look at this up close and they go, “This looks terrible how could you possibly be defending this?”

The argument has to be, “Well, it would just be so much worse without this.” And in fact often if you look to large stable organizations like universities and government agencies, or churches that have been around for a long time it is in fact worse. I think that's roughly right. Another story might be we've hobbled some of the competition between firms that might solve some of these problems.

I honestly think one of the biggest wins we could do is to just allow stronger hostile takeovers. The laws at the moment make it harder to do hostile takeovers. They require a substantial tax on them in essence. If you see a badly run company and you have an idea how it could be run better the problem is how are you going to profit on that? But if you could just buy up the company, change its management and then sell it again after it was better that would be a big, powerful engine for making it better.

There have been times when that mechanism has been allowed to do more and it has made huge changes. That's what inspired people to lock it down and prevent those changes because they were scared it was coming for them.

Richard: Yeah. There's just this status quo bias. What's the regulatory barrier there? Is it antitrust, or what is it that makes it difficult to do this?

Robin: The key thing is that when you are going to try to do a takeover bid you have to warn people so they can bid up the price on you, which means that you end up paying a substantially higher price, 20%, even more above what you would have paid if you could have bought the stock in stealth without people knowing you were trying to buy it up.

Richard: Where do you... This is a technical question. How do you announce it and what happens if just some other….

Robin: Well, there is a formal process by which you announce that you have a certain number of shares in the company and that you're hoping to buy more. Again you can't have bought very many of them by the time you announce this. Then what typically happens is the prices get bid up in the expectation that you'd be willing to pay more for the company.

Then you may or may not succeed in buying it up. There's also a number of other things we allow such as poison pills, various rules in which if there's a takeover then all the sudden some people get some extra stock, and some extra voting shares, and some extra abilities to make it hard for you. We have a whole bunch of these rules that have basically made it difficult for people to take over companies.

Richard: Yeah. Your view is basically irrationality persists, irrationality as in non-profit maximizing behavior, and then presumably that's hurting the aggregate wealth of society. That exists because basically we're protecting institutions. We have a status quo bias-

Robin: Right. We're making it hard to make changes. On the other hand competitive business world is one of our best worlds we have in our world. It's one of our shining examples of productivity and innovation is the business world to the extent that it is free to do something. Now you could just say, "Well, if we make it more free to pursue profits and to innovate then it could be even so much better."

Richard: It's funny because you say this is the best world we have when you compare it to other things. My background is in international relations. People often start with the assumption that the country is trying to maximize something…

Robin: Right. That's even crazier an assumption, presumably it's even easier to find counterexamples to that.

Richard: Yeah. I would go further and say it's harder to find you know…

Robin: Examples of it happening.

Richard: Yeah. Exactly. Why doesn't the US just..

Robin: Right. How many wars were started that were actually expected profit wars for example?

Richard: Yeah. They tend to be pretty crazy. The whole field to a certain extent is sort of built around... Of course that's not how everyone thinks.

Robin: Right. But in the future we could imagine for profit, for company nations for example. Might imagine that it would be possible to make better run nations and that they would be more rational in this sort of selfish, strategic sense. That's a thing that could happen in the future. In some sense futarchy is this proposal to use decision markets for governments and it could in fact achieve that. Maybe we should say a bit about how that might work?

Richard: Do you put futarchy in a larger intellectual tradition? Because a lot of people when they're coming up with an idea... Did you come up with this term by the way?

Robin: Yeah, and I've been ridiculed for it. It has various associations in different languages, et cetera, but I was just thinking of it as a future government. That was my origin of the name. And yet of course the context, there's two key contexts. One is to show how far the idea could go if you just talk about, say firing CEOs or changing churches, or all sorts of smaller organizations. I don't think people get quite as inspired as if they could see how it could become a form of government, because that's pretty grandiose and high status.

Futarchy is trying to show how it might look if you went all the way to that level of application. Not that I'm recommending that we do that first at all. I would recommend we try small scale experiments and work our way up to large organizations, but still that can be an inspiration to go down the path because you hope you might go that far.

Of course it's also related to other proposed forms of government and so it has some differences and similarities to others. You can think about what it's emphasizing and what its problems are compared to the others.

Richard: We put aside, we started with the markets for CEO performance. Could you talk a little bit about the broader, the grander idea? How would your ideal government function?

Robin: In the CEO case we have an outcome that we agree on that's the relevant outcome, IE the stock price for this public company. Then we have discrete decisions. Do we fire the CEO or not? That's the key things we need to make this apply to other things.

For a national government say, the discrete choices would be each new bill that's proposed. We'd be asking, “If we pass this bill are we going to be better off?” Then for the outcome we're going to need to construct it more for a nation. The idea is the legislature still exists but now they vote on bills that defines a national welfare function.

It's a bit like say GDP at the moment, say the Bureau of Labor Statistics defines GDP and then it oversees the measurement of GDP. Of course many scholars often look at GDP numbers and say that the countries with higher numbers are better, and try to recommend policies that would increase your GDP.

Well, now we’re going to authorize this same sort of agency to estimate number like GDP except we’re going to tell them to put more things in the number. Bills before Congress would say, “Count more trees, and count leisure, and count international reputation.” They would just make a bigger formula that included all the stuff they cared about in this measure of national welfare.

But now there would be assets, financial assets that pay out in units of national welfare. If national welfare ends up being 12.9 then it pays out $12.9 or some other financial unit. Now we can then bet on national welfare. But more importantly we can bet on national welfare conditional on whether a particular bill passes.

Then for each bill we'd have these two prices, the price of national welfare if the bill passes and the price if it doesn’t, and then the difference between those two prices is a direct advice about whether or not to pass that bill. We could set that on the side and just have it be giving advice to a legislature, or we could put it directly in charge and just say, “When the market approves of it by having a higher price then that's just as if the legislature had passed it and it just becomes law.”

Richard: To just make sure we’re clear let’s say we’re debating Obamacare. Then we would have to first have sort of an aggregate measure right? We’d say, “What's GDP going to be?” Maybe give that like 40% of the calculation. What’s the human life expectancy in the US going to be in 10 years or whatever. Then you would just do this for a bunch of different things. Then you would just have a market, basically say, “Okay. If Obamacare passes it's going to be X, and then if Obamacare doesn't pass it's going to be Y,” right?

Robin: Right.

Richard: And then…

Robin: This national welfare function, we don't have to redefine it for each new bill. It's just the standard welfare function that we have for all the bills we consider. Then sometimes we'll change the welfare function and then we're changing our metric of consideration. But basically we might have say two slots of day where a new bill is considered by this process, or might even have say 10 slots a day.

At each slot we might even have an auction to decide who gets to put their bill up during that slot. Then during that hour say, or half day, the market decides whether that bill passes. Then we go on to the next bill, and the next half day. Again the national welfare measure would just be the same measure that we had decided on months ago.

Richard: Yeah. Okay. You don't need the ascent of Congress to do this?

Robin: Right. If you want to just make it be advisory you would just need the legal permission to create these markets, and then we can just sit on the side and we could track say, when the Congress passed a bill versus didn't pass a bill did it follow this market advice, and see the net effect of these things. But it would be better for many reasons if it was just more directly in charge.

Richard: Yeah.

Robin: We already have a democratic system where there are often experts who know the right thing about bills and they tell each other the right things. The public never hears that and so politicians just ignore it. The question would be if this was just on the side as an advisory thing would the public pay any attention?

Richard: Yeah. How serious are the regulatory barriers? I mean if you had enough money could you do this for the things that Congress is debating right now?

Robin: Well, I wouldn't do this as the first thing. Again, this would inspire you as an end point that you could eventually get to, but a shorter term project would be say in a presidential election you've got the Democrat or the Republican who might be president. We could just estimate some outcomes for the nation conditional on whether the next president is Democrat or Republican right?

We could have GDP. We could have life span. We could have war deaths. We could have all sorts of numbers and that would be a straightforward thing to do every presidential election. We could just be estimating the consequences of who we elect. We really haven't done that before.

Richard: Is that the best way to do it or is that going to pose difficulties? Because if the market comes back and it says Democrats are unquestionably better for the country than Republicans or vice versa that’ll poison the idea of having markets with half the country wouldn’t it?

Robin: Well, you will want to collect a track record over a longer time. My overall plan is that I want these things to happen in small organizations to get track records there and then slowly work their way up to bigger things. We don't want the only main trials to be national level politics. That doesn’t make sense because you don’t even really get enough data there.

You want a lot of smaller decisions where you get a lot of data and where you can show that this is just working well. Think of it like... I’m old enough to remember a time when the government started to use computers for things. They did that because the private sector was using computers for things and people said, “Hey. Why isn't the DMV using computers if the private sector is?” They got kind of embarrassed and they decided they would try to use computers right?

Because it was just obvious that elsewhere this was a pretty good idea. That's how you want to do innovation ideally is you just want to have lots of people using it because it just seems to work. Then eventually the government is shamed into doing it too.

Richard: Yeah. Do you see opportunities out there besides the CEO markets? What else could be promising places to do this?

Robin: This mechanism really is quite general and it can apply to a very wide range of problems. I would basically mainly be opportunistic about where there's a group of people who are willing to try it there. But just to whet your appetite we can go over a lot of options here.

Most organizations hire people regularly. Each time they have a job opening they usually interview several people for each job. When they hire them for that job they're hoping for certain outcomes. Usually they have some internal process that rates how well that employee is.

They could in two or five years have a rating for that new employee of how well they did. It would be straightforward then to have markets on each candidate for a particular job position saying, "What will be the rating of this employee if we hired them in, say two or five years?" That could just be a general process every time you had a candidate for a job opening.

Of course every time you got a project with a deadline you should have a market on whether you'll make the deadline. You could even have that market on whether you make the deadline give you that probability conditional on changes you might make to the project, i.e. pull back on the requirements. Add resources.

Those are all sort of obvious... Change who's in charge of the project. Those are all obvious things you might do to see if you can make a deadline. Students who are high school students applying to college could have markets saying if they chose college X, what will their outcomes be say after they... In five years, or if they chose college Y.

The markets could tell them which college to pick. Or on the other side of the equation the colleges could have markets in the student applicants saying, "If we accepted this applicant how well would they do after four years here in our program," say.

Richard: Who would be betting on, for example the individual kids going to one college or the other? Their friends and family or how does it [work?

Robin: Well, so for all of these markets there's a key question of who do you allow to participate? One of the issues there is that whoever you allow to participate gets to see the information and the market prices. They're also the people you want to reveal information to so they could be better informed at making choices.

If you had a student who was willing to let the world see their test scores, and their application essay, and even some description of their priorities or whatever, maybe personal information, then you open that market to the public. Then people could browse that material and make a guess about that particular person.

There's a trade off though. If they don't want to reveal as much information about them then they don't have to, but then fewer people in the market will be able to make a good judgment and they will just be degrading the quality of their estimate as a cost of keeping some privacy. You know that's completely reasonable to do but you just want to make that trade off.

Another application that would probably be even more disruptive is when you're thinking of marrying someone and you ask the markets, “How would our marriage go if we get married?” Or you could even think of dating particular people and ask, “How will it go if I date this person?” Those are things of course you would mostly want to be asking people who knew you somewhat better, but the whole point of these markets is you don't have to decide who's good at answering questions. You just open it up and you let them decide.

Richard: I think in that case in particular there’s such an informational asymmetry between you as an individual and everyone else in the world, that if there's one place where a betting market is made that you can not improve on just people making their own decisions about the marriage, and dating, and things like that.

Robin: Now other people who were in that market would want to know if you were betting in it too. There's a general phenomena in these markets where people should be wary of betting against people who know a lot more than they do. This is, for example, one of the rationales for limitations on insider trading and stock markets.

There are many reasonable choices to make there. You could tell the world, "Well, I'm going to be betting in this market on whether my marriage works but you're welcome to bet too." They might think, "Well, I don't know as much as you do. I'm not going to touch that." In order to get them to bet you might say, "Well, I'm not going to bet on that and neither is anybody in my family," right?

You could just set a limit on who's going to be allowed as a way to entice people farther away to participate. Similarly a company who has a stock market on that company, if they could choose to allow insiders then they'd have a choice. If we allow insider trading then people who are not insiders will know they might be trading against insiders and then that might put them off from trading on that stock.

Or on the other hand if we allow... If you prevent the insiders from trading we will entice more outsiders to trade. On the other hand we'll lose the information those insiders would have given had they been allowed to trade.

Richard: Yeah. That makes me think. Do you have an opinion on laws against insider trading? Do you think that they're generally good or bad?

Robin: Well, it seems to me that it's the company that has the cost, so it's not clear to me why anybody else should be having a say. Whoever owns the company is making the trade off in whether to allow insider trading. Now, of course if the company is not being run in the interest of those investors then we have to worry about making good choices about insider trading, but then we have to worry about making a good choice about everything the company does.

That's what we were talking about before when companies were not run for the maximizing profits then the investors have to worry about what they are being run for, and whether they're going to be basically stolen from the people who are managing things. But insider trading is one way they could be stolen from. But there's 1,000 others.

Richard: Yeah. One place where this might really work is I think sports. This is something that you could get a lot of people betting on because people love arguing about sports. You could have a thing where you have the NFL or NBA draft and people always debate should you draft this player, or that player? You could have markets easily based on how many wins…

Robin: Sure. I just happened to have a conversation with someone on that a few hours ago, but it's still an idea that's going to happen some day. When people say betting on a football game today, you’re betting on who's going to win the game and say by how many points, but you might have more fun betting on each play.

That is not only betting on what the play will be and how it will go out but recommending on the play. You could say, “If we pass this play how many yards on average will we get? If we run this play how many yards will we get, or what’s the chance of making a first down?” You could bet on the consequence for each play.

Similarly in a basketball game you could bet on taking out a player, putting a player in. In a automobile race you could bet about when you make a pit stop, when you don't. There's all these choices in games and I think people would find it more engaging to bet on recommendations for choices in the game.

Richard: Yeah. Yeah. You can already with the sports betting. If you go to the websites you can bet for example not just on the game. I don't know if you can do conditional bets. I have never seen that.

Robin: Right. I’ve never seen conditional bets on choices.

Richard: Yeah.

Robin: That's the key thing here, the choice of a player or choice by a coach.

Richard: I've seen stuff like who will win the tip off in basketball, and who's going to win the coin toss in a football game? Who's going to win first quarter?

Robin: I once looked onto doing this for war college war games. As you may know many war colleges have war games where they put teams on different sides and give them various equipment in a simulated war. They have them go to war. You could imagine, well letting everybody else who’s watching the war game give advice about particular strategies in the war game. That seemed plausible to me but then when I talked to people at war colleges I found that most of these war games are kind of fake.

Richard: Yeah.

Robin: They have a predetermined outcome that’s some lesson they want to tell, and so they aren't really letting it be open to winning one side or the other.

Richard: No, that's funny because you'll see headlines every now and then that'll say, “Oh, my God. The US loses to China in a war game,” and yeah I always thought that that’s…

Robin: I’m sure there probably are real war games somewhere. They just aren't at the war colleges. That's where I was thinking I could convince somebody to try this sort of thing.

Richard: Yeah. Have you had any partial successes? Are there projects that are getting off the ground that you are excited about? Have people taken up your ideas anywhere?

Robin: Well, there's been a whole pile of work in blockchain where people have created prediction markets on platforms and tools on various blockchain systems. Unfortunately most of that work has been at a low level of tools and platforms so they haven't really gotten very close to the applications. Blockchain people are just mostly software people and algorithm people.

They're not so much business people who work with particular clients. They just haven't been very eager to get their hands dirty working with particular customers who might want to do markets and particular things. But they've still been collecting all these tools and so hopefully some day somebody will use all those tools to connect to the customers.

Richard: What is the advantage of the blockchain? What is the difference between a blockchain say market versus just something like PredictIt?

Robin: Well, that's an excellent question. Initially the story was that blockchain was out of control, that it couldn't be regulated so you could set up a system on a blockchain. If the regulators didn't like it they didn't have anybody to go to stop it. The blockchain just kept going regardless of who didn't like it.

That was a big selling point. People said, “Well, look at all this financial innovation we can do because we are free from existing regulations on the blockchain.” That's what they said, and then a lot of companies formed on this basis.

But these companies didn't take personal strategies to match that rhetoric. You would think if your plan was to put a product on the blockchain and that you were going to say nanny nanny to the regulators because, “You can’t get me,” you wouldn’t have a big public presence with the headquarters, and your picture in the magazines, and show up in person at conferences right? Because…

Richard: Yeah. Sure.

Robin: ...well, that makes you more obviously a target right? That's what they did though, and then they sort of back pedaled and said later, “Oh, we're following all the regulations.” But you know people don’t really believe that. It's been this big question, to what extent will governments crack down on these blockchain things that at least from the government regulators point of view are not following their rules?

Richard: Yeah. Do you have in mind the Coinbase news that had come out the last few days, or was it today or yesterday that-

Robin: This is just a continuing issue. I don't have any particular recent event in mind but there are lots of stories about regulators thinking of doing a lot more regulating and cracking down more. This is a big question about blockchain is how far will they crack down, and what will be the consequences? Of course people say, “Well, in principle Bitcoin can keep chugging along even if they do crack down,” and no doubt that's true to some degree.

But the question of how much activity there'll be is still somewhat open. You could have it chugging along with a far lower activity because a lot of people have been discouraged.

Richard: Well, yeah. Just for the listener we're talking now on September 8th, 2021 so who knows when people will be listening to this. There's been just news in the last few days about Coinbase, and the FCC, and I don't know all the details but it's something like that…

Robin: In the last few months China had this big policy of saying, “No more mining here.”

Richard: Yeah. Exactly.

Robin: There was a big drop I believe in prices right at that point reflecting the fact that people then realized there'd be a lot less stuff happening in China.

Richard: Yeah… that wasn't reflected in the fact that Bitcoin has been doing pretty well recently right? It was apparently not fatal, or not that bad for Bitcoin right?

Robin: The volatility of these prices is so large that I wouldn't draw much of any inferences from the price movements. It's just wild.

Richard: Yeah, but the price for Bitcoin has been doing well right? Isn't that an indication that whatever the Chinese did it wasn't hurtful to the longterm prospects of cryptocurrency?

Robin: Well, the volatility of these cryptocurrencies is just really large, so that makes it hard to draw many connections between particular events and what's happening with it. That's an issue about these conditional markets. People have noted that if you have a stock market sequence and then you have events you can try to correlate events in the stock market sequence in order to untangle conditional estimates. For example people have tried to do that with betting markets on elections in the stock market in order to say which candidate is better for the stocks by looking at the correlation between those prices.

It's possible to do but the price movements are noisy and so there's a lot of room for arguing there. Just the direct conditional markets are a much clearer signal than these correlations in prices.

Richard: Yeah, there's noisy but there are a lot of elections right? I mean you could even do things like in places that are... You have all the national elections right every two years, and then you have even local elections when you have mayoral races. I guess there's not a lot of…

Robin: Right. You just don't have betting markets in all those races.

Richard: Yeah, but you have corporations that are located there for example-

Robin: Sure.

Richard: ... or industries there. It seems like you... Anecdotally it seems that... I remember. Do you remember Bernie Sanders during the primaries? He won some primary and then he said, “Oh, the...” Or he lost a primary. He lost and then he said... I think he lost a primary and then the market went up. Then his argument was, “Look. These billionaires are so bad.”

Robin: “I’m bad for business and that's the way I want to be.”

Richard: Yeah. He was proud of this. Given the political culture it was the other way around. He might have won and it went down. I don't remember. I think he lost it though.

Robin: A standard story in finance for a long time has been we've got thousands of market prices in the financial world, and there's all these events that happen in the world so in some sense there's really all this information embodied in all these financial market prices, especially if they fluctuate every minute or so.

In principle the answer to all your questions is somewhere out in this vast cloud of financial market prices. That may well be true. It's just not at all transparent. You'd like a clearer answer. A thing that betting markets can do is give you a more direct, clearer answer even if in some sense that answer was already implicit in all the other prices.

Richard: Yeah. I think transparency is key because if someone is doing this research on the effects of stocks in the market of election outcomes I would think they’re probably on Wall Street. They’re probably not in political sciences departments. Would that be your intuition too?

Robin: I mean they're in both places, but again you know there's so much dispute, I mean there are so many interested parties that with statistical analysis it's just possible to do it so many different ways to get the answer you want. I'm sure if you're in the know you could know who was playing those games and who's not, but the rest of us from the outside find it harder to tell.

Richard: Yeah. But your idea of incentives and people getting things right I think would give you an intuition that people playing the stock market are doing better than political scientists, or you don't have that intuition?

Robin: I mean it’s definitely true that there's a lot of very smart people playing stock markets and financial markets, and that a lot of them make money. But they mostly make money from the other people trading in those markets which has to be a warning against ordinary people trying to go out and speculate on these things.

That would be my biggest advice is if you’re going to play the stock market you should be part of one of these organizations who really knows what they're doing. Because if you go out and just try to bet against them most likely you're going to be on the other side of their trades and losing.

Richard: Yeah. Okay, yeah. This is all interesting. It seems like you’re saying it a little bit differently because... Two different things. Because you're saying that you want to start big with the government because it's high status and you want to start from there, but you're also saying we could start somewhere, maybe sports leagues or something.

Do you see the big thinking as a way to incentivize people and just get people excited about this stuff? But do you think practicality people have to start a little bit smaller?

Robin: Definitely just pointing to the big applications can inspire people even if you’re not going to do them first. Making that connection to people can make them more interested. This is also true for many kinds of innovation. Most kinds of startups or companies you'll have each person doing a pretty small think, but you'll want to tell them about how that's connected to the big project of the organization.

That makes them more interested and motivated to be part of the whole project right? I definitely... For the purpose of collecting data and getting solid progress I'd rather do small things first. On the other hand I do think there's this interesting status strategy of starting from the top down. I don't know if you remember the movie The Social Network which is about the early days of Facebook.

The story was there were other social networks before Facebook, but they started with average people and then had an average pool of people you could connect to which wasn't nearly as tempting as Facebook because it started at the very most prestigious place, Harvard, and slowly it worked its way down the status hierarchy adding Yale or Princeton. Then at each point as they expanded it people were eager to join because they were eager to associate with these higher status people.

The general lesson here is it’s often if there’s a status barrier to doing something it’s easier to start at the top and work your way down. I think firing the CEO is a example of starting at that top. If we think about all the different decisions companies make it hard to find a more prestigious and important decision than firing the CEO.

If you could just directly legitimize using speculative markets to make that decision you would have indirectly legitimized lots of other decisions, because people would say, “Well, if you can use that to fire the CEO you could use it to fire the CFO,” right, and CIO?

Richard: Yeah.

Robin: Then maybe to regional manager, and maybe to pick an ad agency right? You’d work your way down the less prestigious decisions but each one of them you could have said, “Well, as long as you’re willing to use it over there why not here?”

Richard: Yeah. You mentioned these things backfiring, so for that specific example, The Social Network, I mean if you’re in politics today and you say an idea came from Harvard that’s usually I think a negative signal. I think most people say that’s bad, or at least they pretend to think that.

It could have the opposite effect I guess. If betting markets become something that people in Washington do and they’re a little bit too complicated for normal people to understand there could be a backlash. Do you worry about that?

Robin: Yeah. Let’s talk about the public perception of betting markets and what sort of attitudes there are to them, and issues with public reaction. I was involved in a publicity fiasco in 2003 when I was part of a DARPA project where we had a research project set up to create betting markets on geopolitical events in the Middle East.

Then on a Monday morning two senators had a press conference where they declared that this project wasn’t going to be betting on death, betting on terrorist attacks, and that was terrible. Then by the very next morning after that the secretary of defense in front of Congress declared the project dead.

In those 24 hours they never asked us if the accusations were correct. They didn’t need to because it was such a tiny project. Why bother to even think about defending it? But that shows that many people have some mental rules about, they don’t think you should be betting on death. That’s just not appropriate. It doesn’t matter why you might be doing that right?

People have some things they might be uncomfortable with betting on and that’s a thing you should stay away from is betting on death, say. But you’ll notice that most of the business press tends to report news in terms of financial market price movements, and they don’t tend to question those movements.

They try to explain them but they don’t question them. If the price of IBM goes up the reporters don’t say, “Well, that was a mistake. It should have gone down.” They might say it went up because of this or because of that, but that’s most accepting the prices as good estimates and then trying to explain them.

Now sometimes people will tentatively say, “Well, maybe these things are too high there or too low here.” But that says that in the business press at least people do defer to financial market prices as sources of information. Then the potential that could apply elsewhere in society there is a lot of deference given to financial market prices in a wide range of contexts.

Richard: Yeah. Yeah. I guess it depends on how sophisticated your audience is. It’s funny. You mentioned the people don’t like death markets. There was at PredictIt... There’s all those markets, will Bashar al-Assad or will Kim Jong-un be in office by this date?

There was one on Kim Jong-un last year. That’s basically, will he be still the leader of North Korea by the end of 2020? It’s basically a death market because there’s not much chance of him getting overthrown, or voted out, or anything. There were some rumors about him having bad health. He was out of the public eye for a while.

There were rumors that he was dead in the press. The market got down to something like 50/50. I remember I bet on this. I bet that he would actually stay in office. He did, and Kim Jong-un-

Robin: Well, we have a more dramatic example of that in the US presidential betting markets. You might know the chance of Biden at the moment is like 20% being the next president-

Richard: Yeah.

Robin: ... which the chance of Trump is 30% right? But Biden is the president right now and Trump lost the last election, so why would the Biden odds be so low? Well, the story is he might die, or become obviously-

Richard: Yeah, I think people also think-

Robin: ... incompetent and then not a candidate.

Richard: Yeah. I think it’s some combination of... You know it’s funny because the market has been underestimating Biden for a really long time, or at least in my opinion underestimating him, or betting against the market. I’ve been winning, but yeah even when he basically wrapped up the nomination it gave him a 70% chance of being the nominee which I thought was ridiculous.

It also always overestimated the chances I thought of Trump dropping dead, not just when he had COVID because there was that brief period where it looked like he could actually die. He was in the hospital…

Robin: Let’s just pause and notice. It’s quite possible to look at these prices and say, “Well, that doesn’t look right,” just like you can read a newspaper article and say, “That doesn’t sound right,” or any other analysis anywhere else right? Why am I recommending these market prices compared to anything else? Well, first of all there is this track record they do better, but there’s this other argument which says, “Okay. If you read the newspaper article and you think it’s wrong what can you do about that?” You can just complain. If you look at the betting market price and you think it’s wrong-

Richard: Yeah, exactly.

Robin: ... you can make money going, betting against it and fixing those prices. That’s the engine that makes them more accurate is all these people that can be enticed and invited to come fix the problems.

Richard: Yeah. Exactly. Yeah. I bet on Biden not dying, and Trump not dying, and both of them making it to election day. Yeah. I made money off of that. [Laughs]

Robin: There you go. I’m not going to certainly argue about that no one could ever find a mistake in these things. The question is when you can find a mistake in things which institution gives you the best opportunities to fix it?

Richard: Yeah. And you can compare the betting markets to, just like punditry, because when I listened to pundits they never gave Biden a chance either so it’s not like the pundits were all saying it’s going to be Biden. I remember most people were talking…

Robin: Let me at this point admit what I would say is the biggest problem with futarchy and with some of these other decision markets, which is that they make hypocrisy harder, which is actually a problem. You might think, “Well, hypocrisy is a bad thing. Making it harder is good right?” Well, let’s walk through that.

At the moment, say ordinary people can claim to love trees and they just care a lot about trees. Trees real estate wonderful and they certainly wouldn’t want to have fewer trees. But then they elect politicians who have to make choices about trees versus other things. Those politicians can probably read the public and say, “Well, they say they like trees but they don’t really like trees that much, so I’m not actually going to go save some trees by interfering with something else.”

Then if the public ever finds out that somehow not everything was being done to save trees, the public can complain and say, “That damn politician! They’re corrupt! They were bought out and I sure hate them. Let’s throw them out of office,”right? Because the politician is allowing the public to be hypocritical, to pretend they care more about trees than they do.

This happens all through the political system. For example we have laws against prostitution that we don’t enforce very well, which allows a lot of prostitution so people can have prostitution and then pretend they’re against it. Same thing with drug laws. A lot of our laws are in some sense to allow the public to pretend to have certain positions that they don’t really have.

The prediction markets, the futarchy decision markets don’t make that so easy. That is if in the national welfare definition you put a high weight on trees, then the speculators are actually going to approve the policies that do get you more trees. If that’s not what you wanted then you won’t be happy.

Richard: Yeah. But I mean there’s such a step removed when you’re talking about voters and what they want right? They want trees…

Robin: But I think it’s... Even when we talked about the example of hiring people. You have a couple of job candidates and you want to hire the best one for the company supposedly right? Well, I think actually when a person volunteers to be in charge of a hiring committee they don’t actually intend to pick the best person for the company. They intend to pick the best person for their coalition in the company.

Forcing these metrics of who is best for the company would interfere with their plan to pick someone who is decent for the company but even better for their coalition. That’s just the sort of thing that happens in many organizations. You would be uncomfortable setting up this process that didn’t give you the flexibility to pretend to do A while really doing B.

Richard: Yeah. Changing gears a little bit do you think that perhaps a foreign country, perhaps some kind of dictatorship might be more amenable to these kind of things? Because think of it this way. They’re often looking for a sense of legitimacy, a reason for status that is not based on the dominant culture which says you need elections, and you need democracy, and you need popular legitimacy.

Robin: I think to answer this we have to realize that there is a world elite culture. This was very striking to me at the beginning of the pandemic a year and a half ago. At the beginning of the pandemic the usual public health experts took their usual positions say against masks, and against travel restrictions, and things like that.

Then this looked like an important thing and all the sudden elites everywhere started talking a lot about the pandemic and discussing what they thought was the right thing to do, and they decided something else. They came up with a different plan with lock downs, and masks, and things like that. Once the elites had decided on that all the public health experts caved and said, “Oh, yeah. Yeah. That’s what we should do.”

Not just in the United States or Britain. All around the world. Remarkably the policies adopted around the world have not varied that much from what the elites together around the world recommended. If you looked in other areas of policy like nuclear energy, or electromagnetic spectrum, drug regulation, policies around the world don’t actually vary that much.

There is some sort of world culture that talks and decides what the right thing to do is. Then everybody does it. There really aren’t very many exceptions. A remarkable thing was that early in the pandemic many of us wanted there to be challenge trials where we would test vaccines quickly and effectively, or even test something like the regulation, and basically nowhere in the world did they allow challenge trials.

Only say recently in Britain have there been the first challenge trials, because just medical experts everywhere. You might think, “Why didn’t some dictator somewhere want to be a hero by defying the world medical ethics experts and doing it different?” None did, right? That really suggests that dictators around the world more crave the approval of the world elites in doing things the way the world elites want to, and their political power at home is more strengthened by appearing to follow along with what the world elites say.

Richard: Yeah. Political science, they call this a logic of appropriateness, and this is what guides government behavior. Although China sort of did that. I mean what China did was go much harder on lockdowns and much harder on mass testing than other people.

Robin: Right.

Richard: That was a limited extent but they didn’t do human challenge trials to my knowledge. But they did do things that were different…

Robin: It’s important to notice there is variation in regulation of the world, but it’s also important to notice how limited it is.

Richard: Yeah. It’s within a narrow range. That’s true, yeah. You see this on social issues. You see like Black Lives Matter protests in New Zealand, and you see LGBT flags. All the countries in the world decided that gay rights was important at pretty much the exact same time.

Robin: This was really a problem for large social innovation. I’ve really over my life thought about lots of big ways we can make big changes to a lot of social institutions, but in a world like this where everybody wants to do what everybody else is doing it’s really hard to get anybody to try any big changes.

Richard: Is an answer to this perhaps geopolitical tension? If the US and China become best friends, maybe they converge, if they hate each other maybe they do completely different things? Could this be a hope that you have international tensions and you have these blocks, and then at least people do different things?

Robin: I don’t know, but a lot of people have mentioned recently how badly say the US Military managed in Afghanistan for several decades. They compare that interestingly to how flexible the US Military was in World War II after a bunch of big losses early on. The remarkable thing, the US Military at the beginning of World War II was not very well run and not very well organized. They had lousy suppliers and things.

Then they made a bunch of big losses early on. Then they thought it was important enough not to keep doing that so that they fired people and fired suppliers. They now put performance as a priority because it was a big war. Apparently that’s the kind of thing it seems to require. But the pandemic apparently wasn’t such a thing right?

Richard: Yeah.

Robin: The pandemic was not a big enough crisis that we fired people who did badly on it. Neither was Afghanistan. We’re in a world where we have these big things we do wrong but they somehow just aren’t bad enough to really scare us into trying different things. The question is where will we ever see some nation or big organization that’s scared enough about losing to be willing to roll the dice and try some big changes?

Richard: When you look at the American Military established under World War II I mean the military establishment was a new thing. You were building basically something from scratch. Now you have all these vested interests. You know it’s funny. The places, the countries with the most US Military… the most military personnel in the world are actually Italy, Germany, Japan, and South Korea right?

Robin: Those are risky, dangerous spots. You’d want troops there wouldn’t you?

Richard: Yeah. Well, maybe but if you notice they have something in common. Those are the Axis powers and the Korean War right?

Robin: Right.

Richard: Basically they’re the exact same place they were in 1945 to 1950 and so-

Robin: Hysteresis right? Enormous path dependence?

Richard: Yeah, exactly. Enormous dependence. Yeah, Italy. Is that obvious? The most dangerous place in the world. Maybe, maybe not.

Robin: No, and it’s not remotely obviously the most dangerous place in the world.

Richard: Yeah. Do you look around the world, and right now do you see variation in the extent to which countries are willing to not only take risks but take risks specifically along the path that you suggest?

There was an article in The Economist earlier this year. I don’t know if you’ve seen it, but the UK, the intelligence agencies have a prediction market but it’s called Cosmic Bazaar. I actually googled it and I couldn’t find it. If you can’t find it on the first page of Google then that’s not a good sign.

Robin: Right. The US intelligence agency has also had an internal prediction market going for a while. They’ve had this interesting way they handle it politically. Inside the CIA the coin of the realm is reports, or analysis. Somebody writes a report that analyzes a particular place like Italy say, and summarizes the key strategic situation there, and the key intelligence situation.

There are these betting markets that exist where people can bet and forecast on these things. But the rule is they don’t cite the betting market in their reports. The market doesn’t get credit for influencing the reports, although it probably does influence the reports. That limits the degree to which it gets budget or attention because why bother to bet in the market if you’re not going to get credit there?

Richard: Yeah. Yeah. There is a paper coming from the intelligence agencies that compared super forecasters and people who had proven some track record versus people in the intelligence community with access to classified information. Phil Tetlock showed me this paper. Yeah. You could probably guess what happened.

The intelligence community lost to the people with the track record of forecasting. You could see why the intelligence community might not want to hype up this result. It seems like there is a lot of data out there-

Robin: Right. Clearly the intelligence community is basically saying, “Yes, we know we could get more accurate estimates from that but we don’t want them. We like our current system,” right? If they were scared that might turn out different right?

Richard: If they were scared of China, yeah, taking…

Robin: Right. Some external threat. The same thing was true about my betting market publicity fiasco in 2003. This was soon after 9/11 and just two years later. People looked at the betting markets and said, “Oh, you’re betting on death. That’s terrible. You have to shut them down.” If they were really scared of terror attacks, if they were actually feeling a large degree of threat they would have said, "To heck with this rule against betting on death. Let’s turn on these markets. Let’s find out where the attacks are going to be so we can stop them."

Richard: They say Bin Laden is just going to put all his money in the market and then attack?

Robin: Well, that was crazy because these were relativity thin markets, and they have a lot of money at stake. Basically a fact that people don’t know about the markets is that many people criticize by saying, “Well, somebody will try to manipulate the markets by betting on one side not because they know better, but because they’re willing to lose money in order to distort the market price.”

That is true. There are people willing to manipulate markets, but that actually makes the prices more accurate. For example in the fire the CEO market you say, “Well, the CEO wants to keep his job, so he will bet in these markets in order to make himself look like the price will be higher if he stays, and lower if he leaves.”

Yes he would have an incentive to do that, but when other traders know that somebody will be trying to manipulate in the market they know to increase their trading and their efforts and that compensates, and actually on net makes the prices more accurate. That’s something we see in theory and we’ve seen in the lab, and we’ve seen in the field. These markets are robust to attempts to manipulate. In fact people who want to manipulate them make the prices more accurate.

Richard: Yeah. Do you think that one way to think we should do is raise the status of thinking about these things, and thinking about betting markets? Because it seems like there is data out there. I mean you could go onto the stock market. We’ve talked about predicted. You can go back to elections.

You can calculate some kind of conditional probabilities. Do you think a good thing could be just have more economists just interested in these questions, and looking at data, and comparing studies?

Robin: It couldn’t be bad, but the question is just how much hope should you have? That’s a key question about a lot of institutional choices. Honestly if you just look at institutional issues in the United States or other countries and you ask which kinds of choices do people get really excited about, and emotional, and interested in, if you tell them about a policy change that would just benefit most everybody they yawn and can’t be bothered to pay attention.

They would just lose interest right? If you tell them about a policy change that will help their side and hurt the other side ooh, they just love that. People are really eager to fight in a battle. A lot of the topics that energize them are the topics that represent a conflict between one group and another group. That means institutional changes are just boring because even if you can find out a better institution it just doesn’t map onto their side versus the other side.

Richard: Yeah. Maybe that gives me an idea for an investment idea. You see these things in the conservative press. They’re talking about some corporation has gone woke right? They have a Critical Race Theory or trading in Coca-Cola or whatever. Basically you could have some kind of mutual fund that just shorts the wokest companies, whoever could short whoever Fox News happens to be complaining about at the time-

Robin: Right. And that would be a way in which you are taking a side. Then that would be more energizing to people. People would just like to-

Richard: Right. Or you could invest-

Robin: ... take a side.

Richard: You could invest in those corporations. Right.

Robin: Right.

Richard: Exactly. Then eventually you would learn if this thing lost money year after year you’d learn something…

Robin: Sure. And in fact ordinary people would be more interested in betting on the stock market if they could simultaneously be taking a political side with their stock market bets, which is…

Richard: But they can. Yeah. Right now we have all these outrages over some corporation is doing this or that, so you’d figure... I wonder if that’s actually inspiring more people to get into the stock market? It’s hard to tell with Robinhood expanding, making it easier. But you could imagine some entrepreneurs doing that right?

You could imagine somebody setting something up and advertising to people, “ We’re going to short all the woke corporations.” You could imagine them doing well.

Robin: Right. The fundamental problem is how do you create, or find a created community that just cares about overall benefit of a nation, or a company, or things like that? Unfortunately one of the main ways that’s ever happened is war. We talked about World War II a bit before.

There’s a literature that suggests that war has been one of the main engineers of innovation for the last 10,000 years which is a terrible fact because it means if you want more innovation you’ll have to have more war. War is just terrible thing.

Richard: Yeah.

Robin: But all this time of peace and prosperity we’ve had for a while here, we also do seem to see a degradation in our interest in coming together for overall collective benefit, and more focus on internal divisions, and more focus on just doing whatever helps us in these little local battles and not caring very much about the overall nation because we’re assuming that’s okay.

Richard: Yeah. Well, you see nationalism manifest itself at say soccer games, like Germany and France are not fighting wars but they’ll go to soccer games. There’s this hooligan culture in Europe where people really, really get into it.

Robin: Right. But would they be willing to change some key national policy in order to make sure they could win more soccer games?

Richard: I think it would have to be... I think the class of the people who makes the policy is different from the soccer hooligans right? It would just be a matter of the elites having some kind of national pride. It doesn’t even have to be national. Could it be just a class pride, or a pride in background, you know these aristocrats?

Before there was mass nationalism there was war right? There was these aristocrats and they had their own value system. They had their codes of conduct.

Robin: Well, I mean the key thing would be say if the elites of Romania for something want Romania to look better in the world’s eye and try to make Romania be run better overall, that could be an energy that would focus on overall quality of Romania as opposed to the left elites in Romania fighting the right elites in Romania right, and being in a battle of taking down the other side.

Richard: Yeah. It sounds like what’s really dangerous is there’s this global elite culture where it’s not just public health. It’s like on social issues, on just...

Robin: Right. They have strong consensus in you just have to follow the global elites to be part of them. There’s not so much competition within those global elites in that sense for doing things effectively.

Richard: Yeah. The competition is just the less well off people in their own countries-

Robin: If you think of say, Elon Musk say, right, if the global elites go, “Tsk, tsk Elon Musk,”and say, “Well, he’s not doing it right. He needs to follow these regulations right,” and then Elon Musk is actually making things better, and making a better internet and a better space industry or whatever, well does Elon Musk... If he wins does that change the elites to be more supporting him, or do they just get more mad that he defied them and he seems to be winning?

Richard: Yeah. What do you think about the potential? There’s a lot of people in Silicon Valley people and the crypto world, people like my friend Balaji Srinivasan and Mark Andreessen, and people like this who really take a dim view of the Davos set, the New York Times read in public. I don’t know if they see themselves this way. I’m not speaking for anybody, but that could potentially be a kind of counter elite right?

Robin: And the danger is that if the regular elites see this defiant group of tech elites winning against them that makes them really mad and wanting to take them down.

Richard: Well, that’s the risk of competition right? The good side, or the more productive side could lose, right? But if we’re thinking about how to have competition and how to... If we’re not going to have wars, if we’re not going start wars then…

Robin: Right. If we can have a fair competition then it would be good if different parts of the world, if the European say tech people said, “Well, we seem to be losing against those people. How could we organize ourselves better,” if the different parts of the world fear competition and then as a result try to find more effective ways to organize themselves that’s great. That’s exactly what we want.

Richard: Yeah.

Robin: But they need to fear it enough to actually be willing to make big changes. The prediction market stuff we’re talking about is off actually relatively big, destructive changes that even tech companies have not been willing to do.

Richard: Right. Are you involved in any projects at the moment? You talked about the post 9/11, the DARPA grant. Is there anything similar going on now?

Robin: I’ve been advising a number of companies over the years but I haven’t seen big trials of the sort I’d really like to be part of. But I keep searching.

Richard: If you had enough of an investment, say somebody if they were some donor who wanted to help you do it would it be a big help or is there some…

Robin: Oh, sure. Of course it could be a big help. There’s two paths to go. One is do this fire the CEO market in which case you’d have to go offshore and just defy regulators to set something up right? With enough money you could do that but you’d have to have a funder who was willing to be associated with something like that.

The other approach is you go within organizations and you fund these small scale trials within organizations. Then what you need is both money and an organization willing to put up with the disruption. Let me just tell you a story about deadlines.

One of the most successful applications of this over the years has been deadlines. That is quite often people have a project, and they have a deadline, and they have these regular project meetings. They get together and they all tell themselves, “We’re on track. We’re going to make the deadline.”

Then they open a betting market and all the sudden the prices drop below 5% that say, “No way. You’re not going to make this deadline.” Of course the market’s right. That really bothers the people running the project who don’t want to continue it.

You might ask, “Well, don’t they want to know if their project is going to make the deadline?” That’s what I want to explain now. If you have a project with a deadline one of the main things you ask yourself is, “If I fail to make this deadline what will my excuse be?” I want to have a good excuse if I fail to make the deadline.

Everyone’s favorite excuse is the following. “We were going along just fine and then at the last minute some weird thing came out of left field and knocked us flat. It’ll never happen again. It’s so weird. It’s so rare. There’s no point in keeping track of this thing or holding anybody responsible. We should just move on.”

Now that story is interfered with if you have a betting market that said all along you’re not going to make this deadline. The story had to be, “We were going along fine and then at the last minute.” That’s why you have all these project meetings where everybody says, “We’re going along fine.” Apparently project managers would rather have a better excuse if they fail than have better warnings about failing the project.

Richard: Yeah. That makes sense, but that’s one path is just to get corporations to act in their own interest and you might be able to do that.

Robin: Right. Actually that is the most promising path. But it would help to have other people spur them on by funding these trials that could get them to overcome the reluctance to do these disruptive things.

Richard: Yeah. I could see the barriers, but it doesn’t sound like this should be the most difficult thing in the world. You just have to have somebody out there…

Robin: But I think if you look at the history of financial innovation and social innovation in general a lot of social innovations were adopted and changed long after they were possible.

Richard: Yeah. Right.

Robin: For example like life insurance or commodity markets, those were possible in the ancient world. They’ve been possible all through history but they didn’t really take off until say the late 1800s. That’s because it just takes a while for people to be willing to try things.

Richard: Yeah. Although I don’t think technology is that independent. You have greater wealth. You have greater bookkeeping.

Robin: Sure. As society gets richer then we just have more room for lots of kinds of experiments, and as more just random ways in which something might get tried.

Richard: Especially, yeah it makes sense a lot of this is on software. Yeah. The cost of computing and all that is going down. Yeah. On that note are you optimistic about, maybe not in the immediate future but some day, futarchy in the long run…

Robin: I’m definitely optimistic in the long run. The fundamental stance to say is when you think of technology you think about gadgets, and materials, and maybe software, but social technology is also technology. We also have technologies, how we run meetings, how we organize firms, how we compensate salespeople, how we vote. That’s all technology too.

We’ve been innovating in that technology as well as the physical technology, but we just have different incentives and dynamics in the social innovation because people can’t own it as much and so they don’t create startups to sell it as often. We have a lot more of these psychological barriers to the social innovation.

If you’re in a company that has physical technology and somebody suggests making a new material you can probably make that new material leave your organizational structure alone. It doesn’t threaten who’s in charge of which divisions so much. But if you have social innovation it goes to the heart of who’s doing what, and who’s in charge of what. That’s a lot more threatening.

Richard: Yeah. This has been a great conversation. It’s fascinating. If there’s anybody who’s out there who’s listening to this who wants to help, who wants to advance the cause of futarchy…

Robin: You know where to find us.

Richard: They can just log onto Twitter, email you.

Robin: Absolutely.

Richard: Okay. It’s been a pleasure Robin. Great talking to you.

Robin: Great talking to you.

I think there are many reasons, but one of the most important is that I’m willing to make public predictions with probabilities to allow people to hold me accountable. Instead of doing my own bookkeeping, I will outsource that job to PredictIt, as I already play the markets there.

I began betting on politics in fall 2018. Since that time, I’ve invested $15,700. I’ve taken out $10,000, and the current value of my portfolio is now approximately $29,000. This means that I have so far made 2.5x my original investment, which makes me feel pretty good about myself. This underestimates how well I’ve done, as PredictIt takes 10% of your winnings. That’s 10% of each successful bet you’ve made, not 10% of your net profits, making it more impressive. (i.e., imagine you win $100. They then take $10, then if you lose $100, you’re down to -$10 in net profit, and then if you win $100 again, they take another $10, and you’re only up +$80. So you’ve won $100 twice, and lost $100 once, but instead of your total payout being $100 or $90, it’s $80. You need to consistently beat the market just to break even)

This is a big relief for me. Tetlock showed that geopolitical experts are on average not any better than educated laymen at predicting events. This to me is one of the most interesting findings in the social sciences, it fit with my view that most of what we call “expertise” is fake, and encouraged me to prove to myself that I was worthy of commenting on public affairs. If it turned out I did worse than the market, there really wouldn’t be much of a justification for me continuing to write about politics, as it would mean you can just go to PredictIt and look at the averages and end up with a better understanding of the world than I can give you. Luckily, it seems that I do add some value.

Other intellectuals who I admire for their honesty like Matt Yglesias and Scott Alexander have given quantitative predictions for 2021. Yglesias uses Metaculus, which has the advantage of letting you predict a wider range of phenomena. Unfortunately, it’s less user friendly than PredictIt, and doesn’t use real money, which means it’s harder for me to find the motivation to become a regular user. So despite its flaws, I’m going to stick with PredictIt. Metaculus seems to attract a smarter crowd, but PredictIt uses real money (with limits), so it’s not clear which market is tougher to measure one’s self against.

I hope to report my returns on PredictIt twice a year, so I’ll revisit this in the fall (let’s say October). For now, I’ll review what I’ve gotten right since I’ve started playing the markets, what I’ve gotten wrong, and talk about what I’m currently betting on. This will be the normal format for these posts.

What I Got Right

I’ve been very good at predicting everything relating to Trump. By 2018, I had seen the same cycle time and time again, when people would predict Republicans would turn on him, then GOP voters would prove they liked Trump a lot more than anyone else in politics, and he’d vanquish his enemies. Then we’d start the whole cycle over again, and people will have forgotten what just happened. I personally thought Trump was finished after he made fun of McCain being captured in Vietnam, all the way back in July 2015. That was the kind of thing that traditionally got you cancelled in the Republican Party, but it didn’t happen in this case, and I learned a valuable lesson about Trump’s hold over the party that has allowed me to successfully predict events since.

I’ve previously written about how liberals care more about politics. Well, within the Republican Party, the pro-Trump faction appears to really like the guy and be dedicated to him, valuing loyalty to Trump over positions on any actual issues. The fanatical pro-Trump faction might be overcome if enough Republicans didn’t like him, but that’s not the case. It seems that there’s something like 30-40% of Republicans who love Trump, 40% who like him with less intensity, and 20% who dislike him with not much intensity (the faction that represents the Liz Cheneys of the world, Republicans who dislike him with high intensity, seems to be limited to those who work for MSNBC and The Washington Post). Theoretically, you could maybe get an anti-Trump majority or plurality, but those are terrible numbers for anyone who wants to do so. A lot can change between now and 2024, but a lot has happened between 2015 and 2021, and real world events have never seemed to impact this simple dynamic within the GOP. Liberals and anti-Trump conservatives who want the man to go away are vastly overrepresented among the chattering classes, which is why the conventional wisdom keeps being wrong.

I won the following Trump-related bets.

1) Trump would finish his first term (bought at approximately 75-80%)

2) Trump would be the 2020 nominee for president (bought at approximately 75-80%)

3) Trump would not be convicted in the first impeachment (bought at approximately 80%)

4) Trump would not be convicted in the second impeachment (bought at around 50% after January 6)

Each of these markets was really a market on whether Republicans would stick by Trump, and with few exceptions they always have.

I also predicted Biden would be the Democratic nominee in 2020 (bought at 26%, wrote about it here, screenshots included). I simply looked at the polling data, saw Biden leading for a really long time, and thought that everyone on Twitter saying he would collapse was just engaging in wishful thinking. I’d seen that in every recent case when someone had a polling lead as long as he did, they ended up being the nominee for their party. I got scared when Sanders did well in the first few primaries, and actually bought some Bernie shares at 39%, but I still held Biden on the assumption that if it wasn’t Sanders, then Biden was the only person the party could possibly rally around.

Maybe my best individual betting day was on Super Tuesday, when I bought Biden shares in states like Minnesota and Maine for around 10-20%. We didn’t have a lot of polling, and this was right after Klobuchar and Buttigieg endorsed Biden to stop Bernie, so I thought there was a good possibility that there would be a major shift towards Biden on that day.

I also predicted Biden would win the presidency, and bought Democrats having unified control of government for about 50/50, which I won but could’ve easily gone the other way.

I predicted Republicans would confirm a new Supreme Court Justice before the election and after the death of Ginsburg (about 50-60% odds IIRC). People underestimate partisanship, and Republicans have always fallen in line on judges. When there were reports Kim Jung Un was dead, it was actually 50/50 whether he would still rule North Korea at year’s end 2020, and I didn’t think some unconfirmed rumors were enough to predict the demise of a guy in his mid-30s, no matter how fat. Also thought Maduro would hang on (about 60% IIRC).

Things I Got Wrong

I bet against Kamala being the VP when YES was around 25%. I thought Biden might choose her, but the price was too high. I also had money on Klobuchar as VP nominee for much less, and maybe it would’ve happened if not for George Floyd, after which Biden specified that he was not only going to pick a woman, but a black woman.

I also put a lot of money on Stacey Abrams running for president, when it was around 15%. There were also a bunch of cases where I’d bet Democrats wouldn’t run for president, when YES was around 70-80% for most of them, like Amy Klobuchar and Seth Moulton (still can’t believe that he was delusional enough to think he had a chance as a boring generic white man no one had ever heard of or cared about).

I underestimated how many Republicans would vote to convict Trump in the second impeachment, even though I was right that he wouldn’t be convicted. I also bet on a popular vote blowout of 10 points or more for Biden at 15%, assuming that because the polls had him up by 7 or 8 points there was a decent chance of an error that would work in the direction of the Democrats. I also took 50% or lower odds of Biden winning states like Ohio, Texas, Florida, and Iowa on the assumption polls were right and markets were too optimistic towards Trump. Similar mistakes were made in Senate races like those in Iowa and Maine. Basically I trusted the polls too much in 2020, and though I was right about Biden ultimately winning and the Democrats taking Congress, it was much closer than I thought.

Predictions for the Future

Here are the things I’m betting on at PredictIt now, with how much I originally paid, what the price is now, and what I think the actual price should be.

Republican nominee for 2024: YES on Trump (Bought 26%, currently 26%, should be 75%)

This is basically following the same formula that I’ve been winning with the whole time: assume Trump will win every battle within the Republican Party. Right after January 6, I didn’t think that the Senate would convict him, but I did tell Razib that after the Twitter ban he might go away. Yet I couldn’t have been more wrong; the Republican Party has completely rallied around him and his personal obsessions, and unlike the Tea Party wave, the internal fights haven’t been about anything ideological like the size of government. It’s just been about Trump, with loyalists purging those who have shown any opposition. I disagree with those who think Trumpism is about economics, and those who think it’s about racism. It’s literally just about the man, and he has a deep emotional connection with the base, which is why we can’t expect someone to just take Trump’s most popular positions and run with them.

What about his health? The life expectancy of a 74-year-old male is 11.8 years. Trump is fat, but he has no major health problems we know about and access to unusually good health care. So I wouldn't give good odds for health related reasons stopping him from running. Some people have argued that he might not want to run, and I find this argument absolutely crazy given everything we know about the man.

Democrat nominee for 2024: YES on Biden (Bought 34%, currently 39%, should be 85%)

I don’t understand how Biden being the nominee can be as low as it is. Just take the base rate. A current president in his first term is almost always the nominee the next time around. Like with Trump, I think people are just radically overestimating how likely it is that an old man that rambles a lot is to going to die soon. I also bought NO on Kamala for 61%. The market is currently 39% Biden, 38% Harris, when I think in reality it’s something like 85% Biden, 14% Harris, and 1% other.

It doesn’t seem that PredictIt is alone in underestimating Trump and Biden. Election Betting Odds actually has both of them lower than PredictIt. If I’m right about a Trump-Biden rematch in 2024, then it’s probably because these markets are dumb, not because PredictIt limits you to $850 a contract.

Here are some of my other bets, following the “bought-currently-should be” format. I will be trading between now and October, so it doesn’t mean I’ll stick to all these, and I’ll bet on new markets as they emerge. The accounting in October will be based on how much money I’ve gained or loss in the aggregate since today, and across my entire betting career.

What will be the corporate tax rate for 2022? Bet NO on 24.6-27.9% (bought 35%, currently 38%, should be 50%)

Gaetz on Judiciary Committee 9/1? YES (32%, 41%, 55%)

Will Biden resign in his first term? NO (75%, 78%, 96%)

Who will win the OH Republican Senate primary? YES on JD Vance (37%, 30%, 55%)

Marjorie Taylor Greene reelected to the House in 2022? YES (63%, 72%, 90%)

Will DC become a state in 2021? NO (93%, 96%, 98%)

More than 9 Supreme Court justices in 2021? NO (91%, 97%, 99%)

Harris files to run for president before end of 2022? NO (69%, 82%, 98%)

Will Liz Cheney win the 2022 House GOP nomination in WY-AL? YES (31%, 31%, 55%)

Will Adam Kinzinger win the 2022 GOP nomination in any Illinois House district? YES (42%, 26%, 55%)

Who will win the 2022 Georgia Republican Senate nomination? YES on Herschel Walker (41%, 41%, 65%)

Which party will win the 2024 US presidential election? YES on Republicans (47%, 47%, 55%)

Will Andrew Cuomo be Governor of New York at the end of the year? YES (55%, 75%, 85%)

Other Predictions

That’s it for PredictIt. Here are some predictions about American society and international relations. All these predictions are about the event in question happening by the end of 2021 unless otherwise noted.

US will see fewer than 100 deaths from political violence: 90%

US will reenter the JCPOA in some form: 75%

The Taliban will take Kabul: 55%

The US will normalize relations with Taiwan: 2%

The US will normalize relations with Syria: 3%

The US will go to war with Iran: 2%

China will go to war with Taiwan: 3%

Biden starts a war that kills at least 20 American soldiers: 5%

Saudi Arabia normalizes relations with Israel: 15%

Russia and Belarus will merge or announce some kind of intention to do so: 20%

If Republicans take the House, and Democrats win the 2024 presidential election, the Republican House refuses to certify the 2024 election in favor of the Democrat: 30% if Trump is the Republican nominee, 5% if anyone else is

Ron DeSantis will be the Republican candidate for VP in 2024: 40%

Tim Scott will be the Republican candidate for VP in 2024: 35%

I will reach 20K Twitter followers: 40%

I will reach 50K Twitter followers: 5%

US murder rate stays above 2019 level in 2021: 90%