From Bryan Caplan, What a Bet Shows:
But someone who wins 10 out of 10 bets – or, in my case, 14 out of 14 bets – almost certainly has superior knowledge and judgment. This is especially true if someone lives the Bettors’ Oath by credibly promising to bet on (or retract) any public statement. A bet is a lot like a tennis match: one victory slightly raises the probability that the winner is the superior player, but it’s entirely possible that he just got lucky. A betting record, in contrast, is a lot like a tennis ranking; people who win consistently against any challenger do so by skill, not luck.
That kinda echoes what I wrote earlier in HBD-as-Destiny Thesis (part 5 of predicting series):
It sounds arrogant to say, but my best investing advice is to ignore other people’s investing advice. So the question is, how do I know I’m so certain? It’s one thing to be right once or twice, but when you do it over and over again and for so many things, maybe there is an underlying skill/strategy involved.
This part is kinda funny:
After losing our unemployment bet, Tyler Cowen objected that betting:
…produces a celebratory mindset in the victor. That lowers the quality of dialogue and also introspection, just as political campaigns lower the quality of various ideas — too much emphasis on the candidates and the competition.
Sounds like he is being a sore loser. But in terms of blog traffic, Tyler wins hand-down. And maybe book sales too.
Most people it would seem overestimate the odds of drastic negative events (such as Trump being impeached, Ebola pandemic, market crash, hyperinflation, recession, etc.) Negativity bias probably plays a role. It’s more fruitful to take the opposite side of a negative bet (predicting that something bad won’t happen) than predicting that something bad will happen.
Namely: In a busy world, ranking people by accuracy is not only helpful in the search for truth, but vital. No one has time to listen to more than a fraction of the armies of talking heads, or the memory to recall more than a fraction of their arguments. If we want to know the future as well as we’re able, we need to identify people with good judgment – and ignore people with bad judgment. The first step, of course, is to unfollow pundits who refuse to put their money their mouths are.
If only that were true, pundits such as Peter Schiff, who for the past decade has been wrong about everything, would have no credibility, but regrettably that is not the case. Rolling Stone and much of the liberal media would be out of business, etc. Those who either make the most noise or have the most appealing narratives tend to rise to the top, not those who are the most accurate.
If there is one problem though with this article, Caplan’s bets are too small, relatively speaking. I would like to see much bigger bets–that would be more exiting. If the stakes are too small, playing may be seen more as a social gesture (declining a bet may be interpreted as rude) than a true conviction about something.