Betting the wrong way on the health care mandate
When the Crowd Isn’t Wise
By DAVID LEONHARDT, NYT
Washington
IN the days leading up to the Supreme Court’s health care decision, rumors began to circulate in Washington that the justices had decided to uphold the law. Liberals around town who might have reason to know the outcome seemed happy, according to the gossip, and a couple of conservative justices had seemed angry when the court met three days before the announcement. On the eve of the ruling, a few respected court watchers went so far as to predict publicly that the law would be upheld.
It is impossible to know how much of the gossip sprang from actual information. Several dozen people — the justices, their clerks, other members of the court staff — did indeed know the outcome in advance. Although they have a record of discretion exceeding even that of some parts of the national security apparatus, they are human. They have friends and relatives, and they have emotions.
With the rumors swirling, I began to check the odds at Intrade, the online prediction market where people can bet on real-world events, several times a day. The odds had barely budged. They continued to show about a 75 percent chance that the law’s so-called mandate would be ruled unconstitutional, right up until the morning it was ruled constitutional.
The market — the wisdom of crowds — turned out to be wrong.
(More here.)
By DAVID LEONHARDT, NYT
Washington
IN the days leading up to the Supreme Court’s health care decision, rumors began to circulate in Washington that the justices had decided to uphold the law. Liberals around town who might have reason to know the outcome seemed happy, according to the gossip, and a couple of conservative justices had seemed angry when the court met three days before the announcement. On the eve of the ruling, a few respected court watchers went so far as to predict publicly that the law would be upheld.
It is impossible to know how much of the gossip sprang from actual information. Several dozen people — the justices, their clerks, other members of the court staff — did indeed know the outcome in advance. Although they have a record of discretion exceeding even that of some parts of the national security apparatus, they are human. They have friends and relatives, and they have emotions.
With the rumors swirling, I began to check the odds at Intrade, the online prediction market where people can bet on real-world events, several times a day. The odds had barely budged. They continued to show about a 75 percent chance that the law’s so-called mandate would be ruled unconstitutional, right up until the morning it was ruled constitutional.
The market — the wisdom of crowds — turned out to be wrong.
(More here.)
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