I think the third objection is the strongest - in addition to the ability to make goals about a good prediction market, you also need a constituency which cares about making aggressive prediction market goals and then reaching them. Need to create (and somehow enforce?) a culture.
I don't think that sounds like a very serious problem? If your opponent is promising to actually accomplish stuff it's going to be hard to beat them if you're too cautious to make any promises yourself.
Yes, tend to agree Eric. A very small part of the electorate actually knows what a prediction market is and politicians running on a platform of prediction market pledges is unlikely to be inspiring to people when quite a lot of people don't care too much about policy anyway.
Scott is trying to get them popular so that they work.
I don't know if they can work as well as he thinks, but he's trying to solve this chicken-and-egg problem for one issue, so it can be used for other issues.
I think it's a pretty serious problem if you propose to influence prediction markets, and this promise doesn't make news cycles or penetrate the popular consciousness because not enough of the public understands what it means to meaningfully discuss it.
Sure, the proposal as a whole definitely needs people to take prediction markets seriously or it won't work. But the third objection in particular isn't about that, and I don't think the problems it raises are very serious.
If politicians are going to be held accountable for campaign promises so that failure actually does bite ("you promised to reduce carbon emissions by 31% by the end of your term in office. you failed. now we are not voting you back in"), then candidates will be very cautious about making any promises that can be nailed down to exactitude - "I promise, if elected, we'll do our darnedest to cut emissions but it's all in the lap of the gods" type wording will become popular instead.
That makes sense in a vacuum but in the context of an election I don't think it holds up as well. Compared to an opponent who's willing to actually make the concrete promises, that kind of weasel-wording will always look weak and untrustworthy. So any candidate will have an incentive to make more specific promises to gain an advantage in this election even if it might make things awkward for them next time.
After all you don't need to worry about getting reelected if you don't win in the first place.
In my fantasy world, Congress passes a law which somehow passes First Amendment muster with the Supreme Court (which is clearly impossible, but this is fantasy) that says "every political promise carries with it an implied warranty, and consumers (voters) are entitled to sue for damages if they "buy" (elect someone) and find that the "product" (elected official) doesn't deliver the warranted performance."
Runs into the problem of "single issue candidate elected on single issue, independent, has no links with the major parties, gets precisely Sweet Fanny Adams done because of that, not alone does he not run for re-election, now he will be sued into bankruptcy by the voters who voted on that single issue he couldn't deliver" and "major parties will weasel-word their way out of every promise and if you do take a case to sue them, they will tie it up in litigation for years".
There's also "we honestly, genuinely meant to do this thing, but when we tried it in reality, turns out the problem is a lot more complicated, difficult, expensive, and time-consuming than our optimistic estimates".
It's a great incentive to "promise nothing, do nothing, pork-barrel like the dickens for your local constituency". (What's the difference between that and now, says you).
Oh well, fair enough. So we restrict the implied warranty to legislation actually passed into law, and only those who vote for its passage are liable. We can even require every piece of legislation to carry an *explicit* warranty, so the terms are crystal clear. (There have to be some basic terms set by our hypothetical Constitutional Amendment, but we want to allow Congress to go beyond them if its feeling its oats.)
And if they want to have the warranty expire after a time, we can allow that, so long as the legislation expires with it ha ha ha.
Not necessarily. It sounds right, but it overlooks some of the ways politics work. For example, let's say Joe Biden runs for re-election on the platform that he's going to raise taxes. We can all believe he really means that, and will do it.
But let's say his Republican opponent, realizing that wealth inequality has become a bit of an issue, *also* says he's going to raise taxes ha ha wink, wink, nudge nudge. It's completely possible for a winning coalition (base + centrists) to believe that he doesn't really mean that, that it's just a bullshit promise to seem further to the left for the purposes of getting elected -- to appeal to persuable centrists and steal some of the rhetorical thunder of the opposition.
So that's a case when a bullshit promise that is clearly not intended to be kept, or which is easily puntable after electoral success, can be a better electoral strategy than a sincere promise that everyone believes will be kept. It's a sad fact of human nature that sometimes what we actually really truly want is lip service to salve our consciences, not actual change.
I thought of another way to put this that may make it clearer. The issue in this election is obesity -- everyone agrees Americans are too fat and Something Must Be Done.
Politician A: "OK, if elected I promise to put all of you on a diet. Ice cream shops will all be closed. A 5-mile run before breakfast will be mandatory, and FBI agents will be randomly auditing Fitbit logs. In 4 years I expect to see average weight decline by 5% I totally mean this [pulling up shirt to expose six-pack abs]."
Politician B: "My opponent is far too timid. We need *real* weight loss, and we need it now! But diet and exercise are the unimaginative crude tools of the pre-Internet Dark Ages. We've got Big Data and smart learning now! Self-driving whatzits! If I'm elected, I promise to look into the latest and greatest schemes, and we'll be sending every American a nice check to buy one of them. Like, just last week there was a report in the New York Post that people who eat more cinnamon lost an average of 15% of their body weight over some period. So maybe we'll be sending you all coupons for cinnamon right after the election. Yay me!"
Fantastic example. I also love your idea that you showed elsewhere about treating votes as purchases and promises come with warranty. This might move us to the proposed Utopia of Plato where no one really wants to lead.
Issue is that like Scott said: politics is hard and real life is complex. Would an "act of God" null the warranty? Does COVID count? Does 9/11? Does "oil prices drop 13%"?
In a way you could have a candidate spend resources preparing for these contingencies, but if disaster didn't strike he wouldn't get reelected. On the other hand, if these null your warranty we'd have very risk taking politicians who aim for best case scenario and everything else is an "Act of God". I am really unsure how to fix this without some kind of lifelong responsibility from politicians that's measured by some international expert body sitting behind Rawls's veil.
Thank you for the kind words...I suppose you could make it work sort of like ballot propositions in California, where a candidate (or party on behalf of their candidates) can sue to have the bonus contract clarified by the courts, meaning the courts are expected to come up with precise guidance on when the bonus will be paid.
Although in that case you might also want to require that any such lawsuits be brought and decided within 1 year of the election during which they were approved (which still is 1 year before the election under which they come into force) *and* allow any voter contributing money 60 days from the time of final court decision to pull his money back out if he doesn't like the court's decision.
Of course, I'm not under the illusion any of this is practical. I went into science *because* I have zero people skills.
I think Candidate B has a big advantage in that situation in either system, but at least under Scott's proposal Candidate A has a means of fighting back by specifically pointing out, "I have committed to specific benchmarks that you'll be able to see by the end of my term. Candidate B has not. Clearly they don't think their plan will really work, so why should you?"
Candidate A will still probably lose mainly because the voters don't actually think weight loss is worth the cost, and that's fine. In this case the added accountability mostly pushes the politicians to be more honest about what they're actually proposing. Candidate B would have more incentive to just come out and say, "Candidate A's plan is an absurd infringement on our rights as Americans. We all agree obesity is a problem, but some prices are too high to pay."
Why does Candidate A only have that advantage under Scott's proposal? Can't he just call a press conference, or buy Facebook ads, that say what you just said? And if it were an effective thing to say (meaning it changed votes), wouldn't that be sufficient?
I had similar thoughts. Scott Sumner has specifically said[1], "I’ve argued that central banks should target the market forecast, that is, set policy at a position where the market expects success."
My first thought is that this would work better if there was a bipartisan consensus on the need to reduce emissions. If Biden fails to meet the goals, what recourse do you have as someone who cares about climate change. "Blaming Biden" in this case seems likely to lead to less action to cut emissions, not more.
Hmmm. It seems like there's some important reasons to set aspirational goals, even if they're not super likely to be achieved? These things can still influence policy decisions all across the administration - if I'm arguing for the more climate-favorable interpretation of laws or regulations across the governmental spectrum, this pledge is a powerful piece of evidence I can point to to argue my case.
There's a lot of space between "impossible" and "easy". I'd expect the goals that give the strongest motivation would be ones that are possible to achieve, but difficult enough that there's a large chance you'll fail.
What's interesting to me is that putting people on the moon within a decade in the sixties feels closer to impossible than easy, yet they did it anyway.
Whoa! It's been years since I've read "If we can put a man on the Moon, why can't we...?" argument. And they used to be fairly common, too. My favorite was the pseudo-feminist joke "If they can put a man on the Moon, why not all of them?"
Does this only work for goals on someone's "side" or would this be criticized if used by someone that a person disagreed with?
I'm bringing to mind some of Trump's "aspirational goals" like building a wall. His supporters didn't judge the goal on his achievement, but as something to strive for, setting the tone for related policies. His opponents treated it like a solid goal, and didn't give it the charity of "aspirational" status. I feel like Biden's opponents are treating his 2030 reduction goal the same way. How do we know if a goal is "aspirational" or actually intended?
I'm confused by this. Clearly if you don't agree that whatever the goal is would be good to go after, you wouldn't want to set it as a goal, either as reflected in the prediction market or otherwise. By 'aspirational' I meant something that we do want to happen, but will just be very difficult to achieve - not something that we don't actually want to happen. If you don't want the wall or you don't want to reduce GHG emissions, obviously just don't set them as goals, "aspirational" or otherwise.
What if you wanted a 10% reduction, but felt that it will take a lot of effort from the government just to keep us at a flat rate. You might see a 50% reduction goal as "aspirational" but in practice impossible or perhaps even insane (due to the distortions such a plan would have on the broader economy perhaps). You might be really happy that Biden suggested 50%, but really really upset if he did what was necessary to do that. You would be a little happy with a small reduction, and super happy with your 10% goal.
A lot of the anti-immigration right doesn't want a military state where armored troops go door to door asking for papers and dragging people off to detention centers, but they do want more border security. They voted for Trump even though his rhetoric was closer to "police state" than "a little more enforcement at the border" and the end result was closer to the more enforcement than police state (for most places).
Yes, I think it's a bad idea to set a goal, aspirational or otherwise that you can't defend on the merits. There's a bunch of reasons for this, but importantly it's likely to create a backlash that undermines actual action towards the result you want. For example, I'm not actually convinced the end result of trump's rhetoric will be "a little more enforcement," as his "police state" rhetoric caused a backlash where polls now show unprecedented amount of pro-immigration sentiment in the US. The police-state rhetoric is red meat for the base, not a serious attempt to build the broad coalition needed for actual action. The same phenomenon can be seen on the left, where "defund the police" caused an obvious backlash, whereas a focus on more defensible positions such as ending qualified immunity would likely have actually built enough support to enact meaningful reform.
If you pledge something, that should be more than just an aspirational goal. He could say "I would really like emissions to be halved in 10 years. I can't guarantee that it will work. However, here are a series of intermediate concrete steps that I am pledging to make happen."
The interesting thing about prediction markets with a long term payout is that it's both a prediction about the thing in question but also an implicit prediction about inflation rates. If inflation is 10% a year for ten years, a bet that pays off at $2.59 at that point is breakeven with a dollar wagered now.
You issue both shares that pay off if the question resolves to "Yes" and shares that pay off if the question resolves to "No", and the odds is the ratio between the two prices.
(This still doesn't 100% work if inflation is likely to be higher if the emission reduction target is achieved than if it isn't, though.)
You can mostly resolve this by investing the bets in an inflation-protected asset, and then using it to make the payout. For example, if I bet $60 against my counterparty's bet of $40, the $100 should be invested in some money market account, and when the bet resolves, the winner gets the money in the account.
>If yes, that's the mechanism which corrects the market. Mitch Hedberg used to say that “escalators can’t break, they can only become stairs”; in the same way, prediction markets can’t break, they can only give you free money.
The lure of "free" money is strong, but it's not infinite - there are real costs both in time and capital investment for the participants. That gives you an upper bound on accuracy, depending on the effectiveness of competing investments and how many unsophisticated investors are in the market. (This was my rationale for exiting, yours too right?)
More broadly, if giving away that money is a cost someone's willing to pay, manipulating policy becomes straightforward. Maybe that price tag is going to be prohibitively high for things like presidential elections where there's massive engagement, but I can't believe there won't be narrow areas where manipulating projections becomes positive expected value. And then it's more or less just legalized bribery of the predictors.
I don't know about broken specifically but I've walked up an escalator that was turned off. It's a little disorienting maybe since you subconsciously expect it to be moving but it's not much harder than walking up stairs.
Yeah I guess I can see how that would be difficult for smaller or less able-bodied people. As an average sized man I have no problem with it and if anything regular stairs are a little on the small side. I habitually walk up and down escalators even when they are moving.
Makes you understand the importance of standardized step heights! Those shallow steps that sometimes occur in plazas on a hillside are equally disorienting in a different way.
Escalator steps don't follow that same standard because they need to be big enough for people to comfortably stand on them, and sometimes put a bag down next to them, and then they are taller because they want to have about the same slope as a standard staircase.
Escalator fun fact: When “The Good the Bad and the Ugly” was the rage in France, department stores in Paris posted signs reminding men to raise their dusters when getting on and off escalators.
> I think prediction markets are better because the market resolves to either 1 or 0 at a specific date.
This is definitely a strength, but gets tricky when the resolution is years and years away. Doubly so in cases like the hypothetical, where a 10-year market is explicitly being evaluated 6 years out for political reasons.
I keep circling back to competing time value of money. I've seen proposals to have people's bets invested in T-bills or index funds or the like, but now you're weighing risk tolerance against having as broad a market as possible.
The financial incentive *exists* at extreme values, sure, but there's an entire layer of analysis to determine if it's significant at the margin. I wouldn't be surprised if the smart money drops out within ~15% of the true value, and determining whether Biden's climate pledge gets evaluated positively or negatively comes down to the actions of 'irrational' actors.
For all its trouble, the stock market has a whole lot better track record than prediction markets.
If you could get prediction markets to be *just as accepted as the stock market* I think that would be a huge win.
Even then, a bunch of people are perfectly happy to lose money in GME for the fun of it. (Or, a whole lot of people can be manipulated into losing money on GME for false reasons.)
I think donating money to a candidate in the hope that they get elected and while elected advances some agenda you care about is a very different risk / reward balance from buying shares of 'yes' valued at $0.40 because you think they should be worth $0.50
If the proposal is to both tie politics directly to markets and also make those markets sufficiently large, it sounds like the proposal is in fact to change that. I'm not at all confident that's a good thing.
Profit seeking isn't infinite no but I think it's stronger than the motive to fudge the results.
I agree that if the result is in the margin of error there will be less money trying to correct the market and so manipulating the market would be. I don't think that breaks the system though. Biden sets his target at 40% then enacts policy that is reasonably expected to reach 50%. If his opponents want to manipulate the market to 39% they have to pay off every investment bank and hedge fund that wants a reasonably safe 25% ROI.
It is self correcting. The more manipulation the more money people make trying to correct the market, the more people will want to participate in the market and earn those returns
>Biden sets his target at 40% then enacts policy that is reasonably expected to reach 50%. If his opponents want to manipulate the market to 39% they have to pay off every investment bank and hedge fund that wants a reasonably safe 25% ROI.
In the scenario where Biden's setting a 2030 target that will be evaluated in 2024, a 25% ROI is south of 4% annual even assuming zero transaction costs and perfect liquidity. That's pretty mediocre even assuming the market actually *is* a safe investment platform, definitely not good enough IMO.
Prediction markets give worse return and so will be less accurate the further out the decision.
Would it be possible to chain markets together to give a return more immediately?
For a the long term goal there is the final market settled in x years. A secondary market predicting what the final market will predict a year or from the goal and so on
I guess that doesn't help get a pay out from market manipulators sooner. You'd just have to keep rolling your bet forward until you were proven correct when the final outcome was revealed
A long term prediction market would need the wager to be held in an appreciating asset. A generic ETF that holds a large diversified basket of stocks would make the most sense in my view (e.g. VT or VTSAX).
Sure, I say as much upthread. It's potentially a useful approach, but it has enough moving parts that I'd want to see it succeed a few times in practice before considering it a potential solution in theory.
Even without importing the complexities of financial regulation, I can see obvious issues with market fragmentation that cut at the basic requirements of prediction markets to function at all. That's before the true land mine of then tying a specifically chosen asset-backed market to explicitly political mechanisms.
(And Ahura Mazda protect you if the market resolution will predictably correlate with the asset's movement!)
The easiest win for prediction markets is using them to guide business decisions. Rather than Biden pledging to move the prediction markets, any ordinary CEO could do it (or better yet, companies could adopt Hanson's [fire the CEO markets](https://www.overcomingbias.com/2008/04/if-i-had-a-mill.html)). There are thousands in the United States that could do this, and probably hundreds of companies with quirky CEOs who would be willing to try. Yet as far as I can tell, no one has yet tried, since hardly anyone cares enough about non-legible expertise. Political prediction markets are a good idea, but unfortunately, we aren't even close yet.
> I trust the combination of this pressure plus a system of accountability to produce something kind of sane
From where I'm standing, it seems like the 50% goal is nowhere near the neighborhood of "something kind of sane". So I expect one of three things to happen under your proposal of using a betting market:
1. Environmental groups put up pressure, Biden doesn't make the announcement they want.
2. Environmental groups put up pressure, Biden makes the announcement they want, proceeds to ignore it.
3. Environmental groups put up pressure, Biden makes the announcement they want and achieves it, economy craters.
That's part of the point. One of the main effects of accountability is making people more cautious about promising things that would be impractical or overly costly to achieve.
Sure, it's just that it seems based on the post that Scott actually expects the outcome to be "we actually cut emissions by 50%" as opposed to "Biden decides that environmental groups aren't worth pandering to", which I consider much more likely.
Yes, but it goes beyond environmental groups. As the political field gets more polarized, the primaries are won by people further to the far left or far right of the political parties. Politicians like Biden who are probably closer to the center than most have to pander to those groups and make big promises in order to hold their party together. Both sides do it about abortion, immigration, etc. If we refused to pander to the extreme positions, it would force the extremes to move closer to the center in order to get some of their preferred policies.
My only worry is the paradox that honesty and accountability in politics is notably not a dominant strategy. The "we'll both raise taxes, but the other guy will lie about it" problem.
Maybe unrealistic promises are one of the electorate's favorite things, and additional fidelity kind of lances the fantasy so many people seem to sign up for.
1. This skews the responsiveness of politicians towards the white/male/young/educated/affluent voters who are more likely to have the time, money, and energy to participate in predication markets, and we already have a way (campaign contributions) in which they exert (too much?) influence.
2. Since putting money at risk is the usual way we ensure that people who participate in prediction markets take their "vote" seriously, this heightens the influence of money on politics, and what we need is *less* of that, not more. Perhaps political campaigns would neutralize each other in the effort to buy the prediction -- but the amount of money they would spend doing so is unfortunate, and would have a regrettable influence on politics in general, e.g. the influence of campaign donors on political parties would get higher, which is the wrong direction.
3. Don't we already have a mechanism for this, in the form of ordinary political polling? Why add another mechanism which is more complicated, inherently suffers from self-selection bias, and which injects more money into the process?
Not saying I personally favor any of these objections, but I can see them being raised, and being effective.
Cynically, one could say that if the voters genuinely cared that Biden reduce US emissions, then they already have ways to hold him to that, and that if he in fact makes vacuous promises that he has no intention of keeping, it's because that strategy has the largest expected payoff for him -- which says something about what voters really want.
You know, if any of that were true in practice, then it would be a *good* idea for CEOs to manage their companies with the primary goal of simply maximizing their stock price -- and we have ample experience to demonstrate that this is disastrous for both the companies and, ultimately, the stockholders.
Just to be clear, in principle this system would give 0 influence to the affluent (at least apart from all the other channels that they have available). Betting on the expected outcome has nothing to do with what the bettor thinks is the appropriate outcome. E.g. if the Koch brother believed that Biden was going to pass effective climate change regulation and he wanted to make money in the prediction market, he would bet on Biden making effective climate change regulation. His presumable opposition to said regulation is immaterial for the betting. (For a real life example; I bet (against a friend) that Trump would win reelection when he gave me odds of 4 to 1; I would not have voted for Trump.)
That real life example is different because your vote didn't affect the odds that Trump would win while influencing a prediction market very well could affect the odds that the prediction market comes true. Consider the example with the environmentalism and suppose that I'm Exxon who wants no environmental regulation. Biden makes his pledge that "I will make the prediction market be >50% for the US to be carbon neutral by 2030" and I immediately buy a billion dollars of 'Yes' predictions, making the prediction be >50%. Biden sees that the pledge is true, so he passes no laws and the environment is not actually protected. I lose money, but that's just a cost of business.
You might say that other people can make free money off of buying the other side, and that's true, but those other people probably have a lot more limited money supply than I do, so they can't bring the prediction down enough.
Are you liable to lose *all* your money doing this? What's to stop some big hedge funds from getting in on "no" as basically a sure bet funded by Exxon? Then you have to keep pouring in capital to tip the balance.
I feel like this is a play you can run exactly once (if that) before you're insolvent
Then Biden sees "well the market doesn't expect me to hit my targets, whew what a relief! now I don't have to close down every gas station in the US to hit that goal I promised in my campaign speech!" and he doesn't bother trying to hit the goals, so the "no" bets win and Exxon don't have to worry about regulations shutting them down.
And then the voting populace is more informed about Biden's actual ability to change certain things, and they vote accordingly in the future. Maybe a bunch of red-tribe switch to voting for Biden next time, because their gas-station fears are alleviated. Either way, voters are more directly able to get what they want. How is this a bad thing?
I don't think it's a bad thing (or a good thing), I do think it won't work the way it is hoped to work, i.e. "by following the prediction market Biden (or whoever gets to hold the hot potato) will definitely work hard to reduce emissions (or whatever the "if elected I solemnly swear cross my heart and hope to die, a humanely raised free range organic died naturally in its sleep after a long and happy life chicken in every slow cooker" promise may be) and so we the people get to set policy effectively, yay us!"
I think like every other metric when it comes to elections, it will get gamified to within an inch of its life. If I want to bet on elections, I'll stick with Paddy Power or the bookies, at least I know what the odds are there.
That's a very good point. I hadn't fully thought that through. However, I am not convinced.
First, I think you might underestimate how costly this would be. It is not like you can put up some finite amount of money and then scare people off; the more you put up, the more people you attract. The scheme you suggests only works if it is indeed clear that Biden will pass no laws. But if that is clear, it very safe to buy the right prediction and make a lot of money.
In other words, Exxon will have to pay off the entire rest of the market for this scheme to work. This can only ever be feasible (let alone profitable) if the market is very thin. Even just 10000 average schmucks can put a real dent in a billionaire. Furthermore, prediction markets are unlikely to remain thin if pledges of the kind Scott discusses become a real thing.
Second, even granting that markets are thin and the scheme you suggest is viable and even profitable, the relevant question is whether moneyed interests are now more powerful than they are in a system without political accountability. I think that clearly they are not. In the system with accountability, interest groups have to buy off politicians. In Scott's system, they have to buy off the entire market. Even if feasible, the latter will surely be more expensive.
As I said in another comment, I don't think Scott's system will work, as much as I like it, because I doubt voters would get it and I really doubt politicians would want it. But I don't think it would benefit the rich.
Okay, explain to me how this works if everyone buys "yes" on "Biden will achieve his emissions reduction goal" and it does happen. So everyone who bet "yes he'll do it" gets a payout.
Where does the money come from? How does the firm running the market make a profit? I imagine the difference would be between those who bet yes and those who bet no, but what if everyone bets yes?
I find the easiest way to think about this (a bit simplified by abstracting from the dynamic aspect) is as follows. Everyone can put some amount of money on either yes or no. All the money is pooled together. (If there is firm running the market, they just take a cut of this money). Whichever side wins shares all the money in the pool, proportional to how much you put up. (so if A bet twice as much as B and they both got it right, A will get twice the share of the winnings.)
So, in the case you describe, if everybody bets on yes and yes happens, everyone will just get their money back (minus a the payment to the firm). There is a problem if no happens: in that case all the money should go to the "no" bettors, but by assumption there aren't any. This is however a silly possibility: anyone could bet an arbitrarily small amount on no and then get all the money if no happens. So this could never happen.
Notice that in the scenario that gbear605 describes, there will be bettors on both sides of the market: Exxon, manipulating the market, betting on yes and everyone else, understanding what is happening and making a handsome (unbounded...) profit, betting on no.
*I* don't need to be persuaded. It would be voters who don't have a clue what "online prediction markets" are, except what somebody -- presumably a demagogue who wants to sabotage the idea -- tells them they are. "A place where people with money to burn bet on political outcomes -- that's where they're telling you the President should find more people to whom to listen."
Does that sound like an easy sell to Jane Q. Public, single black mother employed as a municipal bus driver in St. Louis?
I agree fully with this point; in fact I argued it elsewhere in these comments.
Here I wasn't trying to persuade you that Scott's idea will work, I was only countering your point 1 and 2 that Scott's idea will increase the influence of money on politics. For the reasons discussed above in this thread, I don't think that is true and in fact, I think that effect would go the other way; i.e. it would decrease the power of money over politics. (I still think Scott's idea is infeasible for the reason you just mentioned.)
Sure, but remember I said explicitly I wasn't agreeing with the critiques, merely pointing that these would be made. It feels like one of those proposals of switching to cumulative voting or something that begin with "here, read this 18-paragraph Wikipedia article on the theory."
I think too many regular folks will feel like a clever scheme is being put over on them by the smart/wealthy/well-connected, and given the unusually low levels of trust in elections we have going on these days, that makes it a political nonstarter I would say.
People didn't need a demagogue to tell them how to bet on horses. Or any sector of the economy. People naturally like betting, especially if you call it investing. Why is this different?
It's different because you're trying to persuade voters that the people the President should listen to *more* are the betting class. That is a marketing job I wouldn't take with a $10 million bonus.
He wouldn't listen to the betting class in any meaningful way. The original goal would have to be something that'd please the general population. The betting class just decides whether success is likely. There are only two possible outcomes - the betting class is accurate and they drive the execution of a goal you already liked, or the betting class is inaccurate, creating a vehicle to transfer their wealth directly to you. Which of these is bad?
The one where the betting class is inaccurate, and rewards the wrong actions of the President. Getting a few pennies from my bet doesn't compensate at all for the wrong policies being enacted by the President.
For example: the President says in order to meet CO2 goals, he's going to cut down all the trees in the national parks, because someone once said trees cause pollution and CO2 is pollution, quod erat demonstrandum.
Of course I'm horrified, but unfortunately the betting class either swallows the malarkey or is in the grips of a Russian/Chinese/Koch Brothers/Soros conspiracy, or on drugs, or pursuing a GameStop stock meme of such deep irony only Millenials grok it, and promptly bids up the price of a "yes" future, encouraging the President to yet more folly.
Yes, I can make a few bucks by betting against the market here, but that's not even remotely going to compensate for the President in effect "listening" to whoever can plunk down the most money in this weird little Internet betting parlor (which is how people will see it).
I think #2 is a stronger concern that you are giving it credit. Although it seems difficult to you at this moment, and you would likely make a lot of money in such a world, the system can definitely still be gamed.
One, it can be gamed in a kind of mundane way even in the exact mechanism you mention. Lets say that the "natural" environment of predictions says that Biden is likely to meet his goal by 2030, 53%. By putting a lot of money on a counterbet, his adversaries will tilt that number substantially. Even with lots of people buying up the "free money" options when it's 1%, that number will eventually go back up, and maybe sits at 45% instead of 53%. Now it looks like Biden is less likely to meet his goal. It's not free money from 45% to 53%, as even before the outside shocks Biden was almost equally likely to fail based on the prediction market. Betting enough to get it back to 53% would be expensive and quite possibly a losing proposition. Therefore the gaming of the system succeeded.
Two, you've made a measure of a goal the goal itself. There are lots of ways to affect that goal that have little to do with the underlying premises of his promise. For instance, you could hack the database. Or, more commonly, "make friends" with the owner of the prediction market and have them adjust the questions being asked to skew the results.
To make this work you would likely need billions of dollars on each question that are *not* ideologically spent, to set a baseline. You would also need very strong controls on who gets to ask the questions, who measures the response, etc. It would almost have to be a real part of the federal government.
I think you are giving prediction markets too little credit. Of course it's easy to game if you have the option to turn them into not prediction markets. But it's easy for anyone to check: if you can't easily put a good amount of your money in the market and trust that you'll get paid when the facts come out, it's not working as a prediction market (we currently don't yet have decent prediction markets for almost anything). It has issues but I don't think it's those. People wouldn't repeatedly waste millions of dollars to move a number from 53% to 45% for a few days, changing a small percentage of minds. And if they did, it would get more and more expensive every time they do and people catch up.
I think this misses the point. At least "cut carbon emissions 50% by 2030" is a SMART goal, but it's still just a goal. The issue here is setting a goal is only the first step in the long, hard process of moving from a vision to a strategy and breaking that down into operational details with their own SMART sub-goals. Problem decomposition. It involves too many unaligned actors all working at odds with each other, and that will remain the case no matter how you change electoral promise culture.
Proposing that a goal, instead of being SMART, be about prediction markets instead, is trying to incentivize politicians to actually do the further hard work of problem decomposition, since that is what would move a prediction market.
But this isn't just about incentives. It's about feasibility. The complaint here is it won't be possible to hold Biden to task if the 2030 promise isn't held, because he'll definitely be out of office and will probably be dead by then. But if a shorter timebound promise about prediction markets isn't achieved, I still don't see what voters can do. In the general election, you can vote for the GOP candidate, who isn't going to promise to move prediction markets in the direction of lower emissions, but also isn't going to promise to lower emissions, which is presumably what voters really care about. Trivially, a politician can just promise nothing and then never fail to deliver. But voters want them to at least try to move policy in the direction voters wish. Trying and failing is no worse in terms of outcomes than not even trying.
There's the primary process, but even there, what exactly is the stark contrast? No matter who you vote for, they're likely picking the same staffers and they're stuck with the same Congress and the same agency permanent staffs, and I don't think a ton of novel ideas are going to change because one candidate wins a nomination instead of another. This stuff is so heavily determined by the parties themselves at this point that even someone as prima facie radical as Trump was barely able to move outside of standard GOP policy actions, at least in terms of actual legislation, not Twitter outbursts.
So if the goal of your proposal is more churn in who holds office, maybe you'll achieve that. But if you're trying to create a political climate in which politicians will actually be better able to achieve long term goals, I doubt it. There's a lot more than bad electoral incentives preventing that.
I guess this is a roundabout way of saying I think the actual problem is that voters want the impossible. Biden knows damn well he won't do this, but politicians in general have no choice but to make impossible promises because voters want them to do things the present political system doesn't really allow. I don't believe holding them accountable for this would change things in a way that voters actually want. It would result in politicians who promise less, but what voters actually want is politicians that achieve more.
But promising an accurate amount actually adds to the democratic process. It adds a lever for "Look I think that's an admirable place we'd like to be but realistically that's just not going to happen, I may not promise the moon but I've achieved 85% of my modest pledges and you haven't achieved even 10% of yours". That is currently being shouted down as just not really believing in the goodness of the good thing.
I don't understand what you're trying to say here. Do you want politicians to say "SMART" things that are not feasible? What is the point of that?
It seems to me that that is how the system functions currently and that is how you get a democratic gap, where politicians say what voters want to hear and then do what they/interest groups/donors/the military industrial complex/the Illuminati (insert your preferred theory here :) ) want to do.
Half joking aside, I really don't see what the value is of having politicians say nice things that we all understand they will not and are not able to do and which are therefore totally unaccountable. I agree that with a 2 party system there still isn't much you can do with the information that a politician did not fulfill a pledge. But I don't think the response to that ought to be to do away with accountability altogether.
Fun idea. Moreover, if candidate pledges to move the target to 51%, and then you press them on why it hasn't happened, they will probably try to say, "well the market is just wrong / being manipulated / irrationally weighting unlikely risks / etc."
Which allows you to reply, "So how much of your own money have you put on the other side, so we can actually see your personal confidence in your own pledge?"
To which their natural rhetorical gambit will be, "Oh, but it's uncouth to gamble money on such things, and I'm offended you asked!" echoing the weird backlash that hit Nate Silver after he proposed a wager (for charity) with Joe Scarborough to make their confidence levels explicit.
At that point, though, if they're publicly rejecting the utility of prediction markets, then we can simply exclude the candidate from serious consideration (absent other overriding considerations).
Unlikely to have much effect on outcomes, given the microscopic size (and tbh lack of ideological cohesion) for the rationalist block. But might be self satisfying.
The actually somewhat valid rhetorical escape for the politician in that position would be, "It would be unethical for me to personally invest in the prediction market when I'm actively involved in shaping policy affecting the outcome."
I mean, it's not especially valid IMO. It's like athlete's betting that their team will win. While it's generally illegal, I can't see any conflict of interest or ethical issues; your bet is perfectly in line with your ethical priorities.
This whole idea is based on the premise that good prediction markets aren't easy to manipulate through betting. If one doesn't think that's the case, then this falls apart much earlier.
My ignorant view is that if prediction markets do become popular in the same way as the stock market, then like the stock market they will be influenced by large institutional investors. The ordinary joe with a few thousand or even hundred thousand to sit there for four to ten years waiting to see the end result is going to be out-competed by the firms that sink billions into it. This will lead to the same kind of lobbying of politicians by large concerns and that will have an affect on policies, and that in turn will affect the market.
If there is money to be made, there will be very strong incentives to get that money for yourself.
"At that point, though, if they're publicly rejecting the utility of prediction markets, then we can simply exclude the candidate from serious consideration (absent other overriding considerations)."
You're making a big assumption about which side of the argument public consensus will fall on. Joe Average is not a Very Online nerd who sees betting as a tax on bullshit.
The wiki page doesn't say so, but politics in a prediction-oriented government was central to the plot -- the head of state's title for instance was the Prime Predictor.
My objection isn't to the idea itself. If we really wanted to hold politicians accountable for their promises, then this is as good an idea as any I've heard. It'll never happen though. Obviously politicians have zero interest in being held accountable, but I don't see any evidence that voters have any interest in it either. Sure, there are activists who want to see results, but most voters these days would rather blame their opponents for obstructing progress. Actually making progress might get in the way of that, so they ignore all the broken promises.
I worry that's a key insight. Most voters want someone they can identify with, who embodies their undefinable aesthetic ideal of a good leader, in a way that isn't necessarily even internally consistent.
Finding more tools to "prove" policy commitments or effectiveness could still be useful in certain environments though, I'd hate to throw it out too hastily.
I think a prerequisite is just investing in more tools of political discourse that dissolve tribal attachments to specific policies.
I think Haidt(?) did some research asking participants to craft arguments for liberal policies using conservative values, and vice versa. I think it forced people to show in their arguments that they were considering the other side's point of view, which goes a long way to keeping people from getting entrenched.
Caplan's Open Borders (setting aside the object level question), has a really great meta-political tool called "keyhole solutions." They basically involve taking the critics of your proposal at face value and developing amendments that help hedge against the risks they predict, being sympathetic to those forecasted risks instead of just dismissing them out of hand (even if they are in fact misguided! because this is about building bridges by demonstrating a willingness to work together).
I think those plus steelmanning tend to improve discussions all for the same reasons, they demonstrate a commitment to the principle of charity, and a willingness to be persuaded or compromise with other views.
Won't work on every issue, of course, but more keyhole solutions and appeals to shared values could help more people get on the same side for pursuing certain sets of policies. Then a prediction market to validate those policies or a commitment to them would be much more valuable.
Yes, I really like some of Haidt's work in seeing how people can (or can't) accurately represent their opponent's position and reasoning. I think that if you can't make your opponent's argument in such a way that they would agree it's a fair description (even if you think they're completely wrong), you really aren't qualified to discuss the issue.
I mentioned this in another place, but I'll add more detail here. I think a lot of what Trump campaigned on was signaling about the types of decisions he would make and the interests he would forward when given the opportunity. The left tried to look at each claim he would make as if it were a concrete policy proposal, and then critiqued them as such. This had absolutely no impact on his supporters, which seems to have caused unbelievable amounts of angst within the news media and others. They couldn't seem to understand that Trump's support was not based on whether he did X, Y, and Z, but about who's side he was on.
Biden isn't going to do anything close to reducing emissions by 50% in the next 10 years. His supporters will appreciate anything he does to reduce emissions, even if they only go down 1%, because he's "on their side." They'll blame his opponents for refusing to pass his agenda, and give him credit for trying. Trump's supporters did the same about the wall, immigration, coal, manufacturing, whatever. His opponents refused to fund the wall, change immigration laws, fought him in court, and so on. He was visibly trying, that's what was important to his supporters. You can't yell at the core supporters "he didn't get what he said he would!" and expect them to drop their support. People on both sides know that their opponents have power and will push back, so "did he pass his full agenda y/n?" isn't even all that relevant. Everyone knows Bernie Sanders would struggle to pass anything close to his official agenda, not because he isn't serious, but because there would be a lot of opposition. He's still the best candidate to push that agenda forward and the obvious choice for his core supporters. It's not like them switching to voting for Hillary Clinton is suddenly going to pass their agenda! Trump supporters voting for Jeb Bush wouldn't have curbed immigration, because Jeb wasn't going to go after immigration in the first place.
I agree. Politicians are able to get reelected even if they fail to fullfill their campaign promises. Thus the penalty for making unachievable promises is very low.
People generally vote for candidates that have their own interests at heart. For example, "strength of the economy" often is the most important issue for voters according to polls. Policies that have long term benefits don't seem to be important to voters. Perhaps, a more effective approach (in terms of winning elections and achieving long term benefits) would be something like "achieving 51% likelihood of achieving long term climate goal, conditional on 100% short term likelihood of improving everyone's life"
> One way around this is to use a conditional prediction market - "what’s the probability that emissions will be below X, given that Biden's plan is enacted and stays in place until 2030?"
One problem is, if the probability the plan stays in place is close to 0, people have little incentive to place money-making bets, so the market gets dominated by people trying to move the numbers for political reasons.
The time value of money will severely reduce liquidity in longer-term markets if they're denominated in USD. Supposing you can earn 6% from an index fund, you need at least a 79% advantage on a 10 year bet for it to be worth betting. To get around this problem, the bets should be denominated in shares of SPY, or bitcoin.
Also I'm not confident the markets would be accurate even if they were perfectly liquid. I believe in an even weaker version of the efficient markets hypothesis than the one in the review of inadequate equilibria:
* Each new invention is sorta like a dollar laying on the sidewalk in Grand Central Station for years until someone finally picks it up.
* Historical bubbles and crashes where the markets were obviously wrong.
* Meme stocks like AMC and Gamestop get completely divorced from the intrinsic value of the underlying business.
Yes, it's essential that any cash betting platform invests the bets, to counteract the opportunity cost of having the cash.
I'd argue it should be invested in a low-risk asset, such as a money market, so that the bettors are not exposed to the volatility of markets and instead solely betting on the outcome of the event. For example, if SPY is used as the investment, it makes betting on any SPX outcomes horribly skewed (and any bets on the economy in general).
No matter what asset you chose for bets to be denominated in, some binary outcomes will correlate with the value of that asset, and therefore asymmetric payoffs will cause the market price to substantially differ from the true probability, even in a perfectly efficient market.
Example #1: suppose we have a market for contracts that pay $100 if CO2 emissions are reduced X% by 2040 if the president's plan passes. Suppose the president's plan is to print 10^22 dollars to tile the galaxy with solar panels. This inflation causes the contracts to pay off a lot less than $100 in real terms, so that the market price will rationally be far lower than the conditional probability.
Example 2: Same as above, except the contract pays $100 indexed to changes in the price of SPY, and the president's plan is to be funded by confiscating all the S&P 500 companies instead of printing 10^22 dollars. The market price will be zero regardless of the conditional probability.
This asset-correlation bias is inevitable, but the time-value bias is avoidable.
Predictit markets are heavily biased away from 0 and 100 due to the time value of money. This bias can be greatly reduced by indexing the contract payoffs to an asset that has competitive long-term returns. I don't think the short-term volatility of SPY would bias anything, except where the price of SPY correlates with the events we're trying to predict.
>Yes, it's essential that any cash betting platform invests the bets, to counteract the opportunity cost of having the cash.
Invest the bets in what? I'm guessing you mean something like T-bills or an index fund, but now we're talking about bets that are correlated with the future value of T-bills, index funds, etc. The reason we care about whether Biden posthumously cuts emissions by 50% or not, is because at least some of us believe that emissions not being cut by 50% means living in a Mad Max Post-Apocalyptic Hellscape. So the people that you need to honestly bet on the "No, we're getting the Hellscape" side of the proposition for accurate forecasting, are being asked to put real money into a decades-long wager where if they "win" the payout will be in basically toilet paper when they want a market basket of gold, canned food, and 5.56mm NATO.
Really, even a modest correlation between the proposition's central thesis and long-term ROI of index funds (or whatever) would likely skew the results substantially, but the apocalyptic version is more fun to talk about.
It needs to be a diverse basket of goods whose total value correlates with the general welfare, and then you can orient the questions so that the asset-correlation bias will be in the direction of avoiding policies that have negative impacts on the general welfare.
Dollars do some of that because hyperinflation scenarios generally correlate with bad real world outcomes.
Index funds do some of that because stock market crashes generally correlate with bad real world outcomes
Bitcoin does some of that (eventually) because bitcoin's future market cap will track the size of the global economy in the maximalist scenario. This provides broader exposure than an index fund. Although in the short term it'll be correlated to inflation fears which could be correlated with bad things happening.
Prediction markets will fail to correct proportional to the loss currently inherent in prediction markets: fees, inflation, loss of other potential returns, taxes on winning, regulations, and so on and so forth.
Yes, in the abstract, this idea would be fantastic. In viable real-world prediction markets, I suspect the friction involved would make objection #2 inevitable.
> Second objection: once the prediction becomes a target, aren't a lot of people going to try to distort it in order to make their candidate look good or bad? Probably. This is why we need good prediction markets.
Prediction markets will just become a new form of PR, just like only the analysts, pundits and think tanks that agree with a certain politician are used in their campgains.
So Biden won't campaign touting a prediction that makes him look bad, but will tout ones that are phrased in just the right way to make him look good compared to other candidates.
Then prediction markets will also probably get flooded with cash from PACs, distoring the prediction accuracy. Political campaigns have a lot cash to burn, and if prediction markets become meaningful, they'll burn their money there.
Forgot to address your point: yes, prediction markets will give out free money in such cases, but why would the PACs care? They've served their PR purpose if they got their candidate elected. It still destroys their utility as a prediction market.
While I understand the intuitive appeal, there's a very, very, very obvious flaw in this plan:
> Second objection: once the prediction becomes a target, aren't a lot of people going to try to distort it in order to make their candidate look good or bad? Probably. This is why we need good prediction markets. If a prediction market is big enough and liquid enough, it should be robust against these kinds of distortion attempts.
Our _actual_ market is not resistant to these distortion attempts. More concerningly, a large amount of these distortions are _mandated by law_ and therefore inescapable within the United States.
If you started holding elected officials accountable to the results of a prediction market, I _promise_ you that arbitrary-seeming regulations on those markets will start getting passed that benefit incumbent politicians at the expense of newcomers.
You cannot engineer your way out of a public choice question. It can't be done. If someone claims to be accomplishing that, they are tricking you.
I think this is a wonderful idea. I'm skeptical that it would work in practice, because the idea strikes me as too subtle to capture the attention of a large share of voters. And if voters do not care, then why would politicians. Nor do I think it is in the interest of politicians to persuade voters of this idea. Politicians don't like accountability. But, assuming sufficiently rational voters, this is a very clever idea!
I just want to make a small remark about the first objection: I think that is really not a valid objection at all. You're essentially saying "what if Biden cannot do what he pledges, even if he really tries?". The natural response would be "don't make promises you cannot keep". So this is a feature, not a bug. (I understand that politicians may want to signal their intentions. But intentions are cheap - and hence bad signals.)
Oh, p.s., life expectancy at 78 for a man in the U.S. is 9.43 years. So there is a decent chance that Biden will live to see the failure of his promise. Not that it matters, of course. (I don't know how to adjust the life expectancy for his being the president. On the one hand, I expect presidents have access to above average health care. On the other hand, at about 1 in 11, they get assassinated at a far above average rate...)
The status of prediction markets needs to be raised first. I'd guess most American voters don't know what prediction markets are, and, that among those who do, less than half view them as meaningful. (Most people are not good at thinking in terms of percentages.)
Does Joe Biden even know what prediction markets are?
This seems like you're primarily just fantasizing about a big public figure endorsing a thing that you like.
If ordinary people already took prediction markets seriously, then you could use them to hold Biden accountable whether he mentions them or not--in fact, in that case I suggest it's better if he doesn't, so that he avoids painting a bull's-eye on any single market that could be manipulated. The difference between that world and this world is that you're hoping that if Biden mentions Metaculus then more people will start taking Metaculus seriously.
(Also, it's really weird that you used Metaculus as your example when it is especially vulnerable to your objection #2.)
This feels like another instance of trying to find a technical solution to a social problem. If we geeks just develop the right technology/app/whatever, we can magically solve this big issue. (And I say this as a geek who tends to like technological solutions.)
Even if we successfully explain betting markets to the general public, even if we convince presidential candidates to make quantifiable pledges on said betting markets... none of this will make people care. They're still going to pick their presidential vote by whatever (irrational!) process they've been using all along.
This would only work if voters would be willing to vote based on who delivered on promised prediction markets outcome, and I think it is pretty obvious they are not willing to do that.
Australia, Brazil and others failed in their climate targets presumably because while promising action on climate is popular with (part of) the electorate, steps that would actually achieve promised emission reductions would be horrendously unpopular, given current culture and technology.
> "In order to get Metaculus (or some alternative prediction market) to show a 51% chance of meeting emissions targets, Biden would have to pass a credible package of legislation that puts us on the path to achieving that goal, and makes everyone think it’s more likely than not."
This is making a very optimistic assumption; the actual easiest way to get Metaculus (or some other prediction market) to show a 51% chance of meeting emissions targets would be to either nationalize the target market, or to in some other way subvert the owners of the company to altering their algorithm to show a different number.
The point of making promised using measurements about the things you care about rather than proxies is that it limits your realm of options; in a similar manner, if your goal is to improve the quality of life for the majority of Americans by improving their economic status, you could set a target that actually measures that, or you could set a target of "increase the value of the stock market" assuming that that is a sufficient measure of economic quality for peoples' lives. However, stock prices generally speaking *don't* directly affect most peoples' lives, and thus setting a target to improve that number opens you to a range of activities that are good for improving that target number, regardless of whether that improves the measure you care about or actually makes it worse.
I don't think the voter base would treat those gotchas as a fulfilled promise, just as it doesn't really work to pledge a poverty of 1% and then lie with the stats.
I mean, that currently happens with things like the unemployment rate and the stock market, so I don't see why it would be any different? I admit that something like "nationalize the market" is less probable to be accepted, but "launch a new one that the government runs" is basically the same thing, and that seems pretty plausible in a world where people care at all about prediction markets.
Yeah, I've never understood the hype around prediction markets. If they ever become influential, the government will make sure they don't stay that way.
However, this did give me an idea for a political comedy in which a socialist takes over a futarchy. "Markets are 99.99999% confident that the chocolate ration will be increased to 20 grams this month!"
Here's one way to bootstrap this. One year after a candidate makes a promise, the press could ask them how come the prediction markets aren't showing any confidence in said promises?"
This is the smart way to do it. If there are good prediction markets, then the savvy bits of the media could start using it to hold people accountable. There's no need for the politicians themselves to phrase their promises in terms of the markets.
This is basically what we do with all the economic indicators the Fed and NBER track. Politicians promise "I will improve the economy" and media then ask them "so why is unemployment rising?" or "why is inflation still stuck so low?" or whatever.
I'm worried there may be a bad interaction between problems 2 and 1.
If the Republicans put a few hundred million at the market to drive the market prediction down and that gets the Biden unelected, they could dismantle his policies making their manipulated policy come true.
Overall I'm still cautiously optimistic about prediction markets.
Anybody interested in learning about how prediction markets work, and what it feels like to participate in one (you suddenly get VERY VERY GOOD at putting a number on your gut feelings of probabilities)...
...you might be interested to play Murder She Bet! https://murdershebet.com/ it's a game where you get together with friends and watch a murder mystery TV show, and buy and sell bets (using fake money) on who you think did it 🙂
As the game goes on you get new information, you "update", and adjust your bets accordingly, at any given time the market price is a representation of the info the audience has, etc. Originally designed by Hanson, implemented for the web by me, over the last few months!
"If Metaculus gives a lower number than this, we can consider Biden to have failed in his pledge, and we can hold it against him when he tries to get re-elected."
And then we get the "Oh Look, A Squirrel!" strategy from the Democratic Party. I don't think Biden is going to run again in 2024 but whoever the candidate might be (Kamala Harris? U.N. Known?) the party will simply go "Okay, so we didn't hit the targets. But that wasn't our fault! And besides Metaculus is biased against us! And who are you going to vote for instead, a Republican? Yeah, right! Only Trump-loving Trump-supporting Trump-voting types would reject a Democrat President! If you don't vote for our candidate, then Trump has won!"
All these Accords Held In World Capitals are simply political games. The people are saying that Something Must Be Done, so this is Something. By the time the bill comes due, we'll be out of power. Or maybe the horse will have learned to sing.
"In 2017, the United States emitted 6.5 billion metric tons of greenhouse gases (CO2e). Carbon dioxide accounted for the largest percentage of greenhouse gases (82%), followed by methane (10%), nitrous oxide (6%), and other greenhouse gases (3%). Total U.S. emissions for 2017 totaled 6,457 million metric tons of CO2e and net emissions, taking sinks into account, totaled 5,743 million metric tons CO2e. Greenhouse gases are emitted by all sectors of the economy, including electric power (28% of total), transportation (29%), industry (22%), residential and commercial (12%), and agriculture (9%)."
Good news, people of America! You can no longer drive your car! Or take a bus to work! Or fly on an aeroplane! If you can't cycle or walk to where you want to go, too bad!
Oh yeah, and we're back to the days of lighting your houses by candles, because generation of electricity is as bad as transportation for emissions. Never mind, raw vegetables are the healthiest way to eat and we need to cut out meat anyway!
Yes, the above is very exaggerated. But when you say "ALL carbon emissions" that covers a *lot* of ground.
Absolutely not! Just practice holding your breath, and if you die, well that benefits the planet as you are no longer emitting carbon yourself nor consuming products and services that emit carbon! 😁
Biden is the first politician I've seen in a while who is taking the standard advice to under-promise and over-deliver, with all his vaccination claims - 1 million a day, and 100 million by the first 100 days, upped eventually to 150 million. Only the very last ask, of 70% of adults vaccinated by July 4, looks unlikely to be made, and that one was phrased as an ask, rather than a promise.
"Australia's 2009 Copenhagen summit pledge to decrease emissions 5% by 2020 (in fact, they increased 17%)."
Huh? I think you need to recheck your figures. Emissions are down, not up, on the Copenhagen context. The only sticking point is measuring Kyoto carry credits. Your results source covers only energy and cement production.
The relationship between whatever Australia was doing in 2009 and what it achieved in 2020 is also irrelevant to your thesis. Australia does not have term limits (Australia's longest serving PM spent 18 and a half years in office). The party which held power from the 2008 election produced a hung parliament in the 2010 federal election after infighting and lost convincingly in the 2013 election, in no small part due to the carbon tax it imposed in 2011.
Your examples must come from places with term limits to have any relevance to your thesis.
"Your examples must come from places with term limits to have any relevance to your thesis."
An absence of term limits means that a politician may seek re-election, it doesn't mean they are guaranteed to stay in office. His examples are relevant to the extent that the politicians leaving office was a probability. Certainty is not required.
I think a cousin of the third objection is: even if you *can* hold a president accountable to a campaign promise, it doesn't do much. I don't think presidents really bother trying to avoid setting goals they can't be graded on, so much as they aren't judged about hitting the goal in the first place.
I like the idea, but I don't think the problem is that presidents' promises can't be evaluated. It's that most voters don't pay attention or care about them, and even if they did, it almost certainly won't be enough to change their opinion to vote for somebody else.
For a lot of voters, this may well be rational behavior. There are 4 years between a candidate's promises in the 20XX election and when he gets judged by them. Who *actually* cares first and formost, in 20XX + 4, that the candidate has kept any specific promises? (I'm exempting general welfare promises like "things will be better!")
I submit it's a fairly narrow range of people, those with strong ideologies or specific long-standing concerns, who feel X or Y has gone on for years, is likely to still go on if nothing is done, and want something specific done *and* consider this much more important than any general situation of prosperity/recession, war/peace, and so on. These are pretty ideological people, and in some case narrowly-focussed axe-grinders -- anyway, not a majority.
There's a decent chance the majority in the middle just wants things to be better or at least not worse in some completely general way in 20XX + 4. That is, the economy should be better, their private wealth a bit higher, jobs should be no harder to find, the price of houses/cars/college should not have risen too fast, there should not be war going on that requires actual sacrifice, there should not be a rise in crime they experience, and so on.
*How* these things happened, and indeed whether the President had any real influence on them, in general doesn't really matter. These voters just say "if I'm happier in general, I vote for your re-election. Doesn't much matter how I'm happier." That's not to say voters don't like being given rationalization for their choices -- I think they do. So if the economy is humming along and wages are rising, they like for a politician to say "Things are sweet because I did X, so relect me and I'll continue doing brilliant things like X." And they like for X to be at least vaguely arguably related to their experience of a good economy, butr they don't insist on a well-founded provable link. It's just a rationalization that justfies what they would anyway do based on their feelings.
If nothing else, this is why a candidate can in 20XX say "Vote for me and I'll do X and everything will be great!" and then he can do Not X instead, and as long as things are actually going great in 20XX + 4, get re-elected by saying "I promised I'd do Not X and I did, and it worked out great! Four more years!" That gets opponents grinding their teeth and digging up old videos to say "See? See?! He said nothing of the sort! Watch the video!" but those kinds of arguments almost never work.
Governor Foo is running for President. The economy is in a shambles, crime is rampant, people are rioting in the streets about racism. Governor Foo makes a long list of very specific campaign promises, things he'll do if elected. They are generally popular, and arguably because of this list of promises, Foo is elected.
Four years later, for whatever reason, the economy is roaring, crime is on the run, and the streets are peaceful, except for itinerant mixed-raced troubadoors singing "Ebony and Ivory" to entertain the happy masses commuting to well-paid jobs. However, President Foo has kept exactly none of his campaign promises, has not even made plausible progress on any of them. When asked, he says he was naive and changed his mind, will implement none at all if he is re-elected.
Is there any plausible scenario in which President Foo is *not* re-elected? I think "no."
I ran a vaguely-similar idea by Robin Hanson earlier this year; aside from his work with Eliezer, he's also known as perhaps the most knowledgeable person around on the topic of Prediction Markets. The TL;DR of his feedback was, more or less: It could work, but only if someone has a strong incentive to pay for it. I got the sense that that was a very general objection and I get the sense that it's probably the main stumbling point here too.
I believe he says that a prediction market only needs somewhere in the order of $1M to be liquid enough to work. If Biden made pledges on a prediction market, that would certainly be enough to attract >$1M. Robin talks a lot about using prediction markets to make internal politics in firms more efficient, and that's perhaps where concerns about liquidity gets more pressing.
This seems poorly suited to the US political system in particular. In a country where the party that wins the election can do what it wants until the next election, your proposal addresses a democratic accountability problem with pledges the party makes about future outcomes. But in the US, the major democratic accountability problem is that so many different actors have a say in policy that voters don't know who to credit/blame for outcomes they like/dislike. If you create the expectation that the president is always responsible for meeting specified goals and that failure has real political consequence, you increase incentives for obstruction and sabotage. These perverse incentives already exist but making them an even bigger element of our system seems bad.
Excellent point on incentives. Though I would characterize this as checks and balances along the lines of those that the founders presciently intended, rather than obstruction and sabotage. IMO, government not being able to take action unless a supermajority agrees on it should be seen as a feature, not a bug.
"Stock markets can stay longer irrational than you can stay solvent" is a common saying among (value) stock investors.
So political prediction markets can surely stay longer irrational than politicians can stay in power.
Yes, people who recognize that irrationality might make a killing, just like Micheal Burry made a killing with shorting the housing market in 2008. That does not make the market sane.
This proposal is based on the not entirely explicitly stated premise that Biden's pledge is a promise made by him personally to the American people. And having noted the problems with that interpretation, you conclude that people are just Not Doing It Right. However, another conclusion one could draw upon seeing how problematic interpreting such pledges as personal promises is is to conclude that such an interpretation is not correct. To wit, Biden is the democratically elected representative of The American People, and Biden, as an agent of The American People, is pledging on their behalf to cut emissions. In making the pledge, Biden is asserting that he will plan his policies around this being a priority, and he is committing The American People to either cut emissions, or have their country be on bloggers' lists of Countries That Make Emission Pledge That They Totally Didn't Fulfill. If the electorate feels that Biden should be accountable for how far the country has come by the time end of his first term, they are free to make such an evaluation and vote accordingly regardless of whether there's a prediction market.
Yeah, but that's just partisan politics as usual: "people who support Tweedledee believe he did his very best and was foiled by evil Tweedledum; people who support Tweedledum believe Tweedledee is an incompetent faker shoving the blame off onto Tweedledum to mask his failures".
Yes but this is a prediction market. So if I'm a staunch Republican who thinks Trump did his very best to make America carbon neutral, I cannot count on the loyalty of other Republicans to think the same. Hence, my best bet is to align my bets with the "truth", which I think will majorly influence the majority opinion
If you really want to have more responsive politicians -- and I'm not sure we do, there's a lot to be said for gridlock, unless you feel At One with the madding crowd 100% of the time -- then we should just do what business does: make executive pay largely bonuses. Every Presidential election year minus two we have a giant plebiscite in which The People vote on the bonuses they'll pay for certain objectives attained. Then everyone runs for office two years later and their pay is $0 (or whatever the practical de minimis is) + bonuses they achieve.
And if you *really* want to make the motivation effective on both sides, meaning both politicians and voters take the setting and achieving of goals seriously, then the way you vote for bonuses is you kick in your own money. So everyone who feels passionately about cutting CO2 emissions can throw $1000 of his own money into a pot to be divided among the Congressman, Senators, and/or President who achieve the specified goal within the specified time span.
"If Metaculus gives a lower number than this, we can consider Biden to have failed in his pledge, and we can hold it against him when he tries to get re-elected."
An interesting proposition, but of limited utility since most people don't seem to base their assessments of politicians on hard facts, sound projections, etc.
This is pretty close to Hanson's futurarchy proposals but importantly different since the market is the output not an input to a decision (so you avoid the worry about manipulatability and predictability by other states).
I don't think any of the objections raised are that convincing but actually getting this to work seems impossible. We can't even get the SEC to approve a prediction market with enough liquidity with real money to even have an underlying market.
Also no way you'll get progressives not to distrust anything this market oriented.
1). This seems like a feature not a bug. Biden can't control what a successor might do but he can adjust the amount he pledges to move the price to account for this (if he can only impact chance of hitting goal by 5% pick that goal).
2). This isn't a problem as it just creates arbitrage opportunities provided the market doesn't cap participation or positions.
3). Pols already make promises about higher stock market values. What's the difference?
15% is so preposterous that I was driven to create a Metaculus account to downvote it. So you hae successfully applied Cunningham's law to boost their userbase.
Other egregiously mispriced markets I found with a casual scan: "Human-machine intelligence parity by 2040" at 52%, "Will any body of the US federal government conclude that COVID-19 originated in a lab in Hubei before June 1st 2022" at 39%, "Will 1 bitcoin be worth $100,000 or more before 2025" at 59%
The second objection seems the strongest here. Given the importance of political victory to millions of people, and the staggering sums of money involved, free money might not be enough to put things back to true estimates.
The first and third can be dealt with fairly easily - a promise that's too weak is a joke, not appealing.
But I think you missed the fourth argument. People can't even understand the stock market as a prediction market, and think of it as being some kind of random money-stealing machine. Even some very smart people. How on earth will you get a dorky niche site like Metaculus to become big enough to be relevant to big-league politics? I doubt you could even get the Andrew Yang campaign to try that - they'd think it'd make them look like dweebs, never mind someone like Trump or Biden.
I think your point is valid, but at least one of the facts you used is incorrect because Australia did meet its 2020 pledge target. The outcomes data you link to does not include emissions from land use change while Australia's target was for total emissions including from land use change.
1. This is needlessly complicated. Right now, if a politician makes an old-fashioned campaign promise, the sort of nerds and wonks who trust prediction markets can use prediction markets to evaluate whether those promises are being kept and the politicians in question should be reelected. And everybody else can use whatever it is they already use for the same purpose. So the current system can extract whatever utility prediction markets can provide, whether prediction markets are a fringe thing only a few nerds and wonks care about or something as revered as the NYSE, or anywhere in between. And it can *also* extract whatever value politicians and their constituents feel they are getting from traditional campaign promises, which by their actions they seem to feel is substantial. Your version provides value *only* to the extent that prediction markets are respected, which would seem to make it strictly inferior.
2. In addition to the prospect of the Evil Billionaires(tm) on the Other Side using their billions to drive the prediction market in a way that makes the incumbents look bad, there's also going to be the Gamestop Brigade doing the same thing, on both side. "Our Guy(tm) needs us to go invest in the Our Guy's Telling The Truth portfolio, and if enough of us do this and stay the course, Our Guy wins *and* we all make lots of money from the Evil Billionaires who thought they could manipulate the market! Let's do this!"
3. The Gamestop Brigade will do this, and the Evil Billionaires will be believed to have done this whether they did it or not. And in the end, some of them may lose a lot of money for having done it. But *until* the end, each side has a perfectly good excuse to say, "the market would totally have proven us right except for all those cynical market manipulators rigging the game", and nobody is actually going to e.g. vote Biden out of office because the prediction markets were putting him at only 30% to reduce carbon emissions.
Goodhart's Law and Campbell's Law are real. If you think prediction markets are useful, or likely to be come useful in the future, then don't do this because it will break them. Particularly don't do it now, or any time before prediction markets are as large and robust as the NYSE.
"And everybody else can use whatever it is they already use for the same purpose."
Which is "Did I subjectively do better or worse with Tweedledee in power rather than Tweedledum?" be that "did I get a pay raise, did my taxes go up, did he bravely defend reproductive justice rights/the rights of the unborn, is my house worth more or less", etc.
If people feel they have more money in their pockets, their pet causes are doing well, and things are pretty fine up here on the pig's back, they won't care a straw over a sub-set of stattos going "but he never hit the carbon emission targets he promised! the prediction market had him at only 30%! why are you voting him back in?"
I am intrigued by Scott Alexanders long-standing advocacy of prediction markets. He is an impressively clever guy, so I am totally open to the possibility that there is something vital about such markets I am too dim - or uninformed - to get.
...and with such an intro there is bound to be a but, of course.
Here is my but:
...but is not the only way a prediction market can yield important/useful information about what is likely to happen in the future, a prediction market limited to bettors that have SERIOUS skin in the game?
To elaborate: If betting is restricted to those willing to put 10.000 USD behind their bet (that's just a number - they point is that it must be a serious amount of money for most people), people are incentivized to put in information-gathering costs at least equal to USD 10.000, to have an "enlightened" opinion on what they are betting to happen.
If, by contrast, people can bet sums upwards from USD 1 (or even nothing), the whole betting schtick will be swamped by non-informed bettors who bet just for the fun of it. It will be impossible to distinguish the signal (the bets of seriously informed bettors) from the noise (the uninformed bets by everyone who participate just for the fun of it).
If I am right here, and we - to avoid that - limit betting to those wo have put serious money where their mouth is, we unfortunately run into another problem:
....Most policy-related decisions/events are driven by a ton of factors (think Brexit or the fall of the USSR), which make the random component of what is going to happen, much larger than in most business-related bets (will the share value of Amazon go up or down next year and suchlike). Implying that no sane, ordinary person will bet as much as USD 10.000 on any policy-related future decision/issue taking place.
...Which in its turn implies that you will get a selection effect, where the only bettors willing to back their bets by USD 10.000 or more, are either non-sane people (whose predictions you for a variety of reasons should not have much confidence in); or those rich enough to regard USD 10.000 as a trivial sum to spend just for the fun of it (whose predictions you should not have much confidence in either, since they are so rich they do not have an incentive to get themselves an informed opinion before they place their bet).
That's my problem(s) with the assumed usefulness of prediction markets. But again, Scott Alexander is an extraordinary clever person. What do I miss? Where do I go wrong in the above line of reasoning?
And for the record: I am not at all trying to be smug or anything! Really. I am genuinely interested in whether, and if so why, the above objections miss the mark; or whether there are some benefits to prediction markets I do not see, that trumps these objections.
one well-informed person betting $10k corrects against 10,000 uninformed people each betting $1. Next time around, the well-informed person has more than $10k because they earned a bunch of money on the prediction market (or they become an institutional investor with millions to play with).
A well-informed person will not be $10k on any position in any prediction market, because a well-informed person will know that actual prediction markets limit the maximum prediction to <<$10K. So long as that is the case, a well-informed person will know that it is not worth their while to keep their knowledge up to date to the point where they could make high-quality predictions, unless they are doing so for some completely different reason. The expected return from an ideal $800 PredictIt position is less than the value of the time required to make a high-quality prediction, and the number of people who will be in a position to make high-quality predictions for other reasons and will make a hobby of playing the prediction markets is probably insufficient to drive the market to efficiency.
In order for prediction markets to be efficient, they will have to have much higher limits. If they have much higher limits, they will attract a great many clever people who will be highly motivated to exploit them for their own private benefit, and not all of them will have the constraint, "...but only by making accurate and useful predictions". So, what do the prediction markets say about the probability of prediction markets being robust against the sort of manipulations that will be attempted against them?
I think first you would have to make the average voter aware that there is such as thing as prediction markets, what they do and how the current ones are weak. This should take at least the rest of Biden's first term (since I don't think the average voter knows already, this seems safe).
Also "figuring out how to prevent your successors from dismantling it". Judging by what currently is bulletproof, one needs to craft legislation that gives every legislator something. For instance, the current programs funding NASA seem to be mostly interested in funding something in every state that could block it. Or look at whose ox would be gored if any given welfare rule is changed - the ones that are not changed are the ones where any change hurts someone who can block the change.
It's a given that no Congress can bind the next Congress.
Also, something that's been bugging me this whole thread, is that "giving voters what they *really* want, good and hard" could well end up being a disaster, like inventing the Babelfish was.
Yes, credulity toward the proposition that humanity collectively ever learns anything from its experience rather suggests incredulity towards the proposer having learned something from his experience.
Trying to hold people accountable for their work results runs into all kinds of trouble, including campbell's law/goodhart's law. The more complex, and difficult to evaluate the work results are, the worse the troubles will be.
If we hold politicians accountable for a number of easily quantifiable goals, they will pursue these goals at the cost of everything else. And cook the books. And play all kinds of nasty games with blame-shifting and sabotaging their opponents.
I think we would get better results if we were to hold politicians LESS accountable.
I would love for this to work, but I think that looking at actual IRL stock markets suggests that it wouldn't.
Politicians do in fact pledge to grow the economy and stock market, but don't consistently do so. Instead, they claim success whenever it goes up and blame their opponents whenever it goes down. Since the economy follows semi-predictable but difficult to time business cycles, it's hard to say whether they're even having an effect or not.
In individual stocks, we see all sorts of BS. It's more profitable to try and cash in on a bubble than to short it. Stock markets seem to largely function as a Keynesian beauty contest with only occasional reality checks. "Crazy" fluctuations based on memes, passing news stories, people misreading the name of the stock, etc are *entirely rational for investors to buy into* as long as they think some fraction of people are idiots they can fleece, amplifying rather than suppressing the dumbest voices.
End result? At the end of Biden's presidency, some news story comes out that's bad for his climate targets. Rational investors judge that it's nonsense, but some fraction of people will believe it, so they buy tons of "Biden won't hit his target" contacts, sending the price soaring (and vice versa for the opposite contract). They're right, and morons start buying it, sending the price even higher. Trump supporters start a meme to #HODL "Biden plan won't hit climate targets", diamond hands will win Trump 2024! The price climbs to absurd levels suggesting Biden will personally destroy the planet; this becomes it's own news story, driving the price still higher.
Biden's term ends and he's narrowly reelected, but he blames his failure to hit the prediction market targets on Trump supporters gaming the market and other factors outside his control. Prediction markets are declared racist.
A year later, the smart money quietly sells at the peak of the market. The dumb money panics and sells, mostly at a loss, and the bubble collapses.
In your discussion of Objection 2, you bring up endogeneity ("The Republicans will spend money to artificially deflate the prediction to make Biden look bad and lose re-election") but then seem to ignore it later on in the same discussion ("If the prediction market number is low, everyone will buy because it'll be free money!").
Won't it only be "free money" if the market ends up high enough for Biden to win and continue enacting his policies? Doesn't that in alter the prediction market into a dollar-based popularity contest, or possibly something with similar dynamics to a "dollar auction"?
The first objection is a feature not a bug. Presumably, a market would put greater weight on policies with broad support and less weight on policies enacted by slim temporary majorities. Exactly the sort of compromise policy making that the wings of both (US) major parties have discouraged over the past decade or so.
Would this not produce a huge incentive for obstruction? It's almost like for this to work, we need to replace checks and balances with prediction markets?
Nitpick, but let me take issue with the claim that Biden will probably be dead by 2030. He is currently 78. According to this table (https://www.ssa.gov/oact/STATS/table4c6.html) he would be expected to live an other 9.37 years, which puts us well into 2030. He is probably healthier than the average 78-year-old, so I'd say he will probably still be alive in 2030.
When I explained to a friend how absurdly expensive the Green New Deal would be, she replied that it wasn't actually a real goal, it was like haggling--you always open with an offer you don't expect to be accepted. It also has to be too extreme in order to "motivate the base". Also, achieving politically divisive goals would reduce the fanaticism of your own side, and increase that of the other side.
Holding politicians accountable via prediction markets would be great, but I'm generally more worried about politicians achieving their stupid grand goals than about not achieving them. If by monitoring prediction markets as they monitor opinion polls, politicians learn how to achieve their goals, that could be a net loss.
"If a prediction market is big enough and liquid enough, it should be robust against these kinds of distortion attempts."
Prediction markets are robust against people trying to change them by *trading inside* the market, for exactly the reason stated (outcome A still pays off an expected ~$1, outcome B ~$0).
However, they are not robust against a credible promise to distribute a subsidy proportionately among holders of outcome B, because doing so legitimately changes the expected value of holding that position. To what degree it changes the price depends on how much capital is in (or can get into) the market, how credible the promise is, how many people hear about it in the first place, etc.
This can be combined with taking a position in whatever the prediction market controls, if it's directly hooked up to something of interest, to pump more than enough money out of the system to cover the subsidy plus profit. E.g. there used to be calls to replace the Fed with a prediction market -- in that case, one can take a position in the forex market and then subsidize the predictiFed to pull the price in the appropriate direction.
"Imagine Biden pledges that some prediction market will have a 51% chance of reaching his 2030 emissions target by the time he leaves office. He passes a carbon tax, and the market shoots up from 15% to 30%. Now he knows he’s on the right track, but still has to do more. So he bans a bunch of coal power plants, and it goes up to 45%. He's still not quite there, so he gives big subsidies to solar panels a few days before the campaign season kicks off, the prediction market reaches 51%, and he's able to say he fulfilled his pledge."
This feedback loop is almost entirely blunted if predictors expect Biden to actually care about the prediction market. Once Biden makes that pledge, the prediction market should take it mostly for granted that he's going to take reasonable measures to hit the goal (if possible). If your example's numbers are reasonable absent a pledge, then the market should take for granted that he'll pass a carbon tax, etc. Just making that pledge will cause the market to trade way over 15%, over 30% if he's perceived as serious. If he passes the carbon tax and the market just sits still at 45%, it doesn't provide him much information. If he passes a useless bill, maybe the market ticks down from 45% to 44% or something, but it should price in that he's going to come around to a better bill eventually.
"accept that part of the work of making a global warming plan is figuring out how to prevent your successors from dismantling it"
There is the issue that this would create an even stronger incentive to find ways to lock in policies in ways that violate the spirit of the Constitution or law.
I think the third objection is the strongest - in addition to the ability to make goals about a good prediction market, you also need a constituency which cares about making aggressive prediction market goals and then reaching them. Need to create (and somehow enforce?) a culture.
I don't think that sounds like a very serious problem? If your opponent is promising to actually accomplish stuff it's going to be hard to beat them if you're too cautious to make any promises yourself.
Prediction markets in particular need to be popular for them to have an effect - need to be highly liquid, and people need to take them seriously.
That's true, but it's not very relevant to the third objection specifically.
Yes, tend to agree Eric. A very small part of the electorate actually knows what a prediction market is and politicians running on a platform of prediction market pledges is unlikely to be inspiring to people when quite a lot of people don't care too much about policy anyway.
Scott is trying to get them popular so that they work.
I don't know if they can work as well as he thinks, but he's trying to solve this chicken-and-egg problem for one issue, so it can be used for other issues.
I think it's a pretty serious problem if you propose to influence prediction markets, and this promise doesn't make news cycles or penetrate the popular consciousness because not enough of the public understands what it means to meaningfully discuss it.
Sure, the proposal as a whole definitely needs people to take prediction markets seriously or it won't work. But the third objection in particular isn't about that, and I don't think the problems it raises are very serious.
If politicians are going to be held accountable for campaign promises so that failure actually does bite ("you promised to reduce carbon emissions by 31% by the end of your term in office. you failed. now we are not voting you back in"), then candidates will be very cautious about making any promises that can be nailed down to exactitude - "I promise, if elected, we'll do our darnedest to cut emissions but it's all in the lap of the gods" type wording will become popular instead.
That makes sense in a vacuum but in the context of an election I don't think it holds up as well. Compared to an opponent who's willing to actually make the concrete promises, that kind of weasel-wording will always look weak and untrustworthy. So any candidate will have an incentive to make more specific promises to gain an advantage in this election even if it might make things awkward for them next time.
After all you don't need to worry about getting reelected if you don't win in the first place.
Do you have any evidence of that? It doesn't seem to me that that sort of difference decides many elections.
In my fantasy world, Congress passes a law which somehow passes First Amendment muster with the Supreme Court (which is clearly impossible, but this is fantasy) that says "every political promise carries with it an implied warranty, and consumers (voters) are entitled to sue for damages if they "buy" (elect someone) and find that the "product" (elected official) doesn't deliver the warranted performance."
Runs into the problem of "single issue candidate elected on single issue, independent, has no links with the major parties, gets precisely Sweet Fanny Adams done because of that, not alone does he not run for re-election, now he will be sued into bankruptcy by the voters who voted on that single issue he couldn't deliver" and "major parties will weasel-word their way out of every promise and if you do take a case to sue them, they will tie it up in litigation for years".
There's also "we honestly, genuinely meant to do this thing, but when we tried it in reality, turns out the problem is a lot more complicated, difficult, expensive, and time-consuming than our optimistic estimates".
It's a great incentive to "promise nothing, do nothing, pork-barrel like the dickens for your local constituency". (What's the difference between that and now, says you).
Oh well, fair enough. So we restrict the implied warranty to legislation actually passed into law, and only those who vote for its passage are liable. We can even require every piece of legislation to carry an *explicit* warranty, so the terms are crystal clear. (There have to be some basic terms set by our hypothetical Constitutional Amendment, but we want to allow Congress to go beyond them if its feeling its oats.)
And if they want to have the warranty expire after a time, we can allow that, so long as the legislation expires with it ha ha ha.
Or politicians and their surrogates will simply make excuses.
The excuses that the Trump and Obama cults come up with on behalf of their respective champions are a sight to behold.
Not necessarily. It sounds right, but it overlooks some of the ways politics work. For example, let's say Joe Biden runs for re-election on the platform that he's going to raise taxes. We can all believe he really means that, and will do it.
But let's say his Republican opponent, realizing that wealth inequality has become a bit of an issue, *also* says he's going to raise taxes ha ha wink, wink, nudge nudge. It's completely possible for a winning coalition (base + centrists) to believe that he doesn't really mean that, that it's just a bullshit promise to seem further to the left for the purposes of getting elected -- to appeal to persuable centrists and steal some of the rhetorical thunder of the opposition.
So that's a case when a bullshit promise that is clearly not intended to be kept, or which is easily puntable after electoral success, can be a better electoral strategy than a sincere promise that everyone believes will be kept. It's a sad fact of human nature that sometimes what we actually really truly want is lip service to salve our consciences, not actual change.
I thought of another way to put this that may make it clearer. The issue in this election is obesity -- everyone agrees Americans are too fat and Something Must Be Done.
Politician A: "OK, if elected I promise to put all of you on a diet. Ice cream shops will all be closed. A 5-mile run before breakfast will be mandatory, and FBI agents will be randomly auditing Fitbit logs. In 4 years I expect to see average weight decline by 5% I totally mean this [pulling up shirt to expose six-pack abs]."
Politician B: "My opponent is far too timid. We need *real* weight loss, and we need it now! But diet and exercise are the unimaginative crude tools of the pre-Internet Dark Ages. We've got Big Data and smart learning now! Self-driving whatzits! If I'm elected, I promise to look into the latest and greatest schemes, and we'll be sending every American a nice check to buy one of them. Like, just last week there was a report in the New York Post that people who eat more cinnamon lost an average of 15% of their body weight over some period. So maybe we'll be sending you all coupons for cinnamon right after the election. Yay me!"
My prediction is that B wins in a walk.
Fantastic example. I also love your idea that you showed elsewhere about treating votes as purchases and promises come with warranty. This might move us to the proposed Utopia of Plato where no one really wants to lead.
Issue is that like Scott said: politics is hard and real life is complex. Would an "act of God" null the warranty? Does COVID count? Does 9/11? Does "oil prices drop 13%"?
In a way you could have a candidate spend resources preparing for these contingencies, but if disaster didn't strike he wouldn't get reelected. On the other hand, if these null your warranty we'd have very risk taking politicians who aim for best case scenario and everything else is an "Act of God". I am really unsure how to fix this without some kind of lifelong responsibility from politicians that's measured by some international expert body sitting behind Rawls's veil.
Thank you for the kind words...I suppose you could make it work sort of like ballot propositions in California, where a candidate (or party on behalf of their candidates) can sue to have the bonus contract clarified by the courts, meaning the courts are expected to come up with precise guidance on when the bonus will be paid.
Although in that case you might also want to require that any such lawsuits be brought and decided within 1 year of the election during which they were approved (which still is 1 year before the election under which they come into force) *and* allow any voter contributing money 60 days from the time of final court decision to pull his money back out if he doesn't like the court's decision.
Of course, I'm not under the illusion any of this is practical. I went into science *because* I have zero people skills.
I think Candidate B has a big advantage in that situation in either system, but at least under Scott's proposal Candidate A has a means of fighting back by specifically pointing out, "I have committed to specific benchmarks that you'll be able to see by the end of my term. Candidate B has not. Clearly they don't think their plan will really work, so why should you?"
Candidate A will still probably lose mainly because the voters don't actually think weight loss is worth the cost, and that's fine. In this case the added accountability mostly pushes the politicians to be more honest about what they're actually proposing. Candidate B would have more incentive to just come out and say, "Candidate A's plan is an absurd infringement on our rights as Americans. We all agree obesity is a problem, but some prices are too high to pay."
Why does Candidate A only have that advantage under Scott's proposal? Can't he just call a press conference, or buy Facebook ads, that say what you just said? And if it were an effective thing to say (meaning it changed votes), wouldn't that be sufficient?
Is this a Scott Sumner guest post? Seriously though, using deep/efficient prediction markets to hold government policy to account is a great idea.
I had similar thoughts. Scott Sumner has specifically said[1], "I’ve argued that central banks should target the market forecast, that is, set policy at a position where the market expects success."
[1]: https://www.econlib.org/archives/2018/04/target_the_unbi.html
My first thought is that this would work better if there was a bipartisan consensus on the need to reduce emissions. If Biden fails to meet the goals, what recourse do you have as someone who cares about climate change. "Blaming Biden" in this case seems likely to lead to less action to cut emissions, not more.
Then maybe he shouldn't make the pledge in the first place.
Hmmm. It seems like there's some important reasons to set aspirational goals, even if they're not super likely to be achieved? These things can still influence policy decisions all across the administration - if I'm arguing for the more climate-favorable interpretation of laws or regulations across the governmental spectrum, this pledge is a powerful piece of evidence I can point to to argue my case.
Wouldn't it be more powerful to have a possible goal? Don't we work the hardest when we know success is possible?
There's a lot of space between "impossible" and "easy". I'd expect the goals that give the strongest motivation would be ones that are possible to achieve, but difficult enough that there's a large chance you'll fail.
What's interesting to me is that putting people on the moon within a decade in the sixties feels closer to impossible than easy, yet they did it anyway.
Whoa! It's been years since I've read "If we can put a man on the Moon, why can't we...?" argument. And they used to be fairly common, too. My favorite was the pseudo-feminist joke "If they can put a man on the Moon, why not all of them?"
Does this only work for goals on someone's "side" or would this be criticized if used by someone that a person disagreed with?
I'm bringing to mind some of Trump's "aspirational goals" like building a wall. His supporters didn't judge the goal on his achievement, but as something to strive for, setting the tone for related policies. His opponents treated it like a solid goal, and didn't give it the charity of "aspirational" status. I feel like Biden's opponents are treating his 2030 reduction goal the same way. How do we know if a goal is "aspirational" or actually intended?
I'm confused by this. Clearly if you don't agree that whatever the goal is would be good to go after, you wouldn't want to set it as a goal, either as reflected in the prediction market or otherwise. By 'aspirational' I meant something that we do want to happen, but will just be very difficult to achieve - not something that we don't actually want to happen. If you don't want the wall or you don't want to reduce GHG emissions, obviously just don't set them as goals, "aspirational" or otherwise.
What if you wanted a 10% reduction, but felt that it will take a lot of effort from the government just to keep us at a flat rate. You might see a 50% reduction goal as "aspirational" but in practice impossible or perhaps even insane (due to the distortions such a plan would have on the broader economy perhaps). You might be really happy that Biden suggested 50%, but really really upset if he did what was necessary to do that. You would be a little happy with a small reduction, and super happy with your 10% goal.
A lot of the anti-immigration right doesn't want a military state where armored troops go door to door asking for papers and dragging people off to detention centers, but they do want more border security. They voted for Trump even though his rhetoric was closer to "police state" than "a little more enforcement at the border" and the end result was closer to the more enforcement than police state (for most places).
Yes, I think it's a bad idea to set a goal, aspirational or otherwise that you can't defend on the merits. There's a bunch of reasons for this, but importantly it's likely to create a backlash that undermines actual action towards the result you want. For example, I'm not actually convinced the end result of trump's rhetoric will be "a little more enforcement," as his "police state" rhetoric caused a backlash where polls now show unprecedented amount of pro-immigration sentiment in the US. The police-state rhetoric is red meat for the base, not a serious attempt to build the broad coalition needed for actual action. The same phenomenon can be seen on the left, where "defund the police" caused an obvious backlash, whereas a focus on more defensible positions such as ending qualified immunity would likely have actually built enough support to enact meaningful reform.
If you pledge something, that should be more than just an aspirational goal. He could say "I would really like emissions to be halved in 10 years. I can't guarantee that it will work. However, here are a series of intermediate concrete steps that I am pledging to make happen."
The interesting thing about prediction markets with a long term payout is that it's both a prediction about the thing in question but also an implicit prediction about inflation rates. If inflation is 10% a year for ten years, a bet that pays off at $2.59 at that point is breakeven with a dollar wagered now.
You issue both shares that pay off if the question resolves to "Yes" and shares that pay off if the question resolves to "No", and the odds is the ratio between the two prices.
(This still doesn't 100% work if inflation is likely to be higher if the emission reduction target is achieved than if it isn't, though.)
You can mostly resolve this by investing the bets in an inflation-protected asset, and then using it to make the payout. For example, if I bet $60 against my counterparty's bet of $40, the $100 should be invested in some money market account, and when the bet resolves, the winner gets the money in the account.
Agreed, but see the discussion of long-term prediction markets in the second section of https://astralcodexten.substack.com/p/mantic-monday-scoring-rule-controversy
>If yes, that's the mechanism which corrects the market. Mitch Hedberg used to say that “escalators can’t break, they can only become stairs”; in the same way, prediction markets can’t break, they can only give you free money.
The lure of "free" money is strong, but it's not infinite - there are real costs both in time and capital investment for the participants. That gives you an upper bound on accuracy, depending on the effectiveness of competing investments and how many unsophisticated investors are in the market. (This was my rationale for exiting, yours too right?)
More broadly, if giving away that money is a cost someone's willing to pay, manipulating policy becomes straightforward. Maybe that price tag is going to be prohibitively high for things like presidential elections where there's massive engagement, but I can't believe there won't be narrow areas where manipulating projections becomes positive expected value. And then it's more or less just legalized bribery of the predictors.
“escalators can’t break, they can only become stairs”
Have you ever tried walking up a broken escalator?
I don't know about broken specifically but I've walked up an escalator that was turned off. It's a little disorienting maybe since you subconsciously expect it to be moving but it's not much harder than walking up stairs.
I find it very much harder, because of step heights. (See Kenny below.)
Yeah I guess I can see how that would be difficult for smaller or less able-bodied people. As an average sized man I have no problem with it and if anything regular stairs are a little on the small side. I habitually walk up and down escalators even when they are moving.
Makes you understand the importance of standardized step heights! Those shallow steps that sometimes occur in plazas on a hillside are equally disorienting in a different way.
https://diy.stackexchange.com/questions/244/is-there-a-standard-height-and-depth-for-stairs
Escalator steps don't follow that same standard because they need to be big enough for people to comfortably stand on them, and sometimes put a bag down next to them, and then they are taller because they want to have about the same slope as a standard staircase.
Escalator fun fact: When “The Good the Bad and the Ugly” was the rage in France, department stores in Paris posted signs reminding men to raise their dusters when getting on and off escalators.
Yes? I'm confused, what point are you trying to make?
It's very wearying to walk up a broken escalator, because the step heights differ from those of stairs.
On further thought, you're right. Thanks for clarifying!
Yes, multiply times in the Moscow metro. What's wrong with that?
вопрос: где лось и белка. Срочно, Наташа
I had a lot more confidence in markets before GME got memed up to a $20B market cap.
Gamma hedge against meme magic or you too will end up on the WSB hall of fame
I think prediction markets are better because the market resolves to either 1 or 0 at a specific date.
I'm not shorting GME (are you?), but if there was anything on PredictIt that was as misvalued as GME, I would definitely be shorting it.
> I think prediction markets are better because the market resolves to either 1 or 0 at a specific date.
This is definitely a strength, but gets tricky when the resolution is years and years away. Doubly so in cases like the hypothetical, where a 10-year market is explicitly being evaluated 6 years out for political reasons.
I keep circling back to competing time value of money. I've seen proposals to have people's bets invested in T-bills or index funds or the like, but now you're weighing risk tolerance against having as broad a market as possible.
The financial incentive *exists* at extreme values, sure, but there's an entire layer of analysis to determine if it's significant at the margin. I wouldn't be surprised if the smart money drops out within ~15% of the true value, and determining whether Biden's climate pledge gets evaluated positively or negatively comes down to the actions of 'irrational' actors.
For all its trouble, the stock market has a whole lot better track record than prediction markets.
If you could get prediction markets to be *just as accepted as the stock market* I think that would be a huge win.
Even then, a bunch of people are perfectly happy to lose money in GME for the fun of it. (Or, a whole lot of people can be manipulated into losing money on GME for false reasons.)
In the end, it appears people don't spend that much (of their own money at least) in these things. https://slatestarcodex.com/2019/09/18/too-much-dark-money-in-almonds/
I think donating money to a candidate in the hope that they get elected and while elected advances some agenda you care about is a very different risk / reward balance from buying shares of 'yes' valued at $0.40 because you think they should be worth $0.50
If the proposal is to both tie politics directly to markets and also make those markets sufficiently large, it sounds like the proposal is in fact to change that. I'm not at all confident that's a good thing.
Profit seeking isn't infinite no but I think it's stronger than the motive to fudge the results.
I agree that if the result is in the margin of error there will be less money trying to correct the market and so manipulating the market would be. I don't think that breaks the system though. Biden sets his target at 40% then enacts policy that is reasonably expected to reach 50%. If his opponents want to manipulate the market to 39% they have to pay off every investment bank and hedge fund that wants a reasonably safe 25% ROI.
It is self correcting. The more manipulation the more money people make trying to correct the market, the more people will want to participate in the market and earn those returns
>Biden sets his target at 40% then enacts policy that is reasonably expected to reach 50%. If his opponents want to manipulate the market to 39% they have to pay off every investment bank and hedge fund that wants a reasonably safe 25% ROI.
In the scenario where Biden's setting a 2030 target that will be evaluated in 2024, a 25% ROI is south of 4% annual even assuming zero transaction costs and perfect liquidity. That's pretty mediocre even assuming the market actually *is* a safe investment platform, definitely not good enough IMO.
That is a fair point I hadn't considered.
Prediction markets give worse return and so will be less accurate the further out the decision.
Would it be possible to chain markets together to give a return more immediately?
For a the long term goal there is the final market settled in x years. A secondary market predicting what the final market will predict a year or from the goal and so on
I guess that doesn't help get a pay out from market manipulators sooner. You'd just have to keep rolling your bet forward until you were proven correct when the final outcome was revealed
A long term prediction market would need the wager to be held in an appreciating asset. A generic ETF that holds a large diversified basket of stocks would make the most sense in my view (e.g. VT or VTSAX).
Sure, I say as much upthread. It's potentially a useful approach, but it has enough moving parts that I'd want to see it succeed a few times in practice before considering it a potential solution in theory.
Even without importing the complexities of financial regulation, I can see obvious issues with market fragmentation that cut at the basic requirements of prediction markets to function at all. That's before the true land mine of then tying a specifically chosen asset-backed market to explicitly political mechanisms.
(And Ahura Mazda protect you if the market resolution will predictably correlate with the asset's movement!)
The easiest win for prediction markets is using them to guide business decisions. Rather than Biden pledging to move the prediction markets, any ordinary CEO could do it (or better yet, companies could adopt Hanson's [fire the CEO markets](https://www.overcomingbias.com/2008/04/if-i-had-a-mill.html)). There are thousands in the United States that could do this, and probably hundreds of companies with quirky CEOs who would be willing to try. Yet as far as I can tell, no one has yet tried, since hardly anyone cares enough about non-legible expertise. Political prediction markets are a good idea, but unfortunately, we aren't even close yet.
> I trust the combination of this pressure plus a system of accountability to produce something kind of sane
From where I'm standing, it seems like the 50% goal is nowhere near the neighborhood of "something kind of sane". So I expect one of three things to happen under your proposal of using a betting market:
1. Environmental groups put up pressure, Biden doesn't make the announcement they want.
2. Environmental groups put up pressure, Biden makes the announcement they want, proceeds to ignore it.
3. Environmental groups put up pressure, Biden makes the announcement they want and achieves it, economy craters.
That's part of the point. One of the main effects of accountability is making people more cautious about promising things that would be impractical or overly costly to achieve.
Sure, it's just that it seems based on the post that Scott actually expects the outcome to be "we actually cut emissions by 50%" as opposed to "Biden decides that environmental groups aren't worth pandering to", which I consider much more likely.
So the root problem is that environmental groups are self-sabotaging by making unreasonable demands?
Yes, but it goes beyond environmental groups. As the political field gets more polarized, the primaries are won by people further to the far left or far right of the political parties. Politicians like Biden who are probably closer to the center than most have to pander to those groups and make big promises in order to hold their party together. Both sides do it about abortion, immigration, etc. If we refused to pander to the extreme positions, it would force the extremes to move closer to the center in order to get some of their preferred policies.
Seems like a win to me. If environmental groups are actually making unreasonable demands, we don't want our politicians pandering to them.
"Politicians stop making pandering promises they never intended to keep" also sounds like a win.
I think that's good insight.
My only worry is the paradox that honesty and accountability in politics is notably not a dominant strategy. The "we'll both raise taxes, but the other guy will lie about it" problem.
Maybe unrealistic promises are one of the electorate's favorite things, and additional fidelity kind of lances the fantasy so many people seem to sign up for.
The main objections I can see people making are:
1. This skews the responsiveness of politicians towards the white/male/young/educated/affluent voters who are more likely to have the time, money, and energy to participate in predication markets, and we already have a way (campaign contributions) in which they exert (too much?) influence.
2. Since putting money at risk is the usual way we ensure that people who participate in prediction markets take their "vote" seriously, this heightens the influence of money on politics, and what we need is *less* of that, not more. Perhaps political campaigns would neutralize each other in the effort to buy the prediction -- but the amount of money they would spend doing so is unfortunate, and would have a regrettable influence on politics in general, e.g. the influence of campaign donors on political parties would get higher, which is the wrong direction.
3. Don't we already have a mechanism for this, in the form of ordinary political polling? Why add another mechanism which is more complicated, inherently suffers from self-selection bias, and which injects more money into the process?
Not saying I personally favor any of these objections, but I can see them being raised, and being effective.
Cynically, one could say that if the voters genuinely cared that Biden reduce US emissions, then they already have ways to hold him to that, and that if he in fact makes vacuous promises that he has no intention of keeping, it's because that strategy has the largest expected payoff for him -- which says something about what voters really want.
You know, if any of that were true in practice, then it would be a *good* idea for CEOs to manage their companies with the primary goal of simply maximizing their stock price -- and we have ample experience to demonstrate that this is disastrous for both the companies and, ultimately, the stockholders.
Just to be clear, in principle this system would give 0 influence to the affluent (at least apart from all the other channels that they have available). Betting on the expected outcome has nothing to do with what the bettor thinks is the appropriate outcome. E.g. if the Koch brother believed that Biden was going to pass effective climate change regulation and he wanted to make money in the prediction market, he would bet on Biden making effective climate change regulation. His presumable opposition to said regulation is immaterial for the betting. (For a real life example; I bet (against a friend) that Trump would win reelection when he gave me odds of 4 to 1; I would not have voted for Trump.)
That real life example is different because your vote didn't affect the odds that Trump would win while influencing a prediction market very well could affect the odds that the prediction market comes true. Consider the example with the environmentalism and suppose that I'm Exxon who wants no environmental regulation. Biden makes his pledge that "I will make the prediction market be >50% for the US to be carbon neutral by 2030" and I immediately buy a billion dollars of 'Yes' predictions, making the prediction be >50%. Biden sees that the pledge is true, so he passes no laws and the environment is not actually protected. I lose money, but that's just a cost of business.
You might say that other people can make free money off of buying the other side, and that's true, but those other people probably have a lot more limited money supply than I do, so they can't bring the prediction down enough.
Are you liable to lose *all* your money doing this? What's to stop some big hedge funds from getting in on "no" as basically a sure bet funded by Exxon? Then you have to keep pouring in capital to tip the balance.
I feel like this is a play you can run exactly once (if that) before you're insolvent
Then Biden sees "well the market doesn't expect me to hit my targets, whew what a relief! now I don't have to close down every gas station in the US to hit that goal I promised in my campaign speech!" and he doesn't bother trying to hit the goals, so the "no" bets win and Exxon don't have to worry about regulations shutting them down.
And then the voting populace is more informed about Biden's actual ability to change certain things, and they vote accordingly in the future. Maybe a bunch of red-tribe switch to voting for Biden next time, because their gas-station fears are alleviated. Either way, voters are more directly able to get what they want. How is this a bad thing?
I don't think it's a bad thing (or a good thing), I do think it won't work the way it is hoped to work, i.e. "by following the prediction market Biden (or whoever gets to hold the hot potato) will definitely work hard to reduce emissions (or whatever the "if elected I solemnly swear cross my heart and hope to die, a humanely raised free range organic died naturally in its sleep after a long and happy life chicken in every slow cooker" promise may be) and so we the people get to set policy effectively, yay us!"
I think like every other metric when it comes to elections, it will get gamified to within an inch of its life. If I want to bet on elections, I'll stick with Paddy Power or the bookies, at least I know what the odds are there.
That's a very good point. I hadn't fully thought that through. However, I am not convinced.
First, I think you might underestimate how costly this would be. It is not like you can put up some finite amount of money and then scare people off; the more you put up, the more people you attract. The scheme you suggests only works if it is indeed clear that Biden will pass no laws. But if that is clear, it very safe to buy the right prediction and make a lot of money.
In other words, Exxon will have to pay off the entire rest of the market for this scheme to work. This can only ever be feasible (let alone profitable) if the market is very thin. Even just 10000 average schmucks can put a real dent in a billionaire. Furthermore, prediction markets are unlikely to remain thin if pledges of the kind Scott discusses become a real thing.
Second, even granting that markets are thin and the scheme you suggest is viable and even profitable, the relevant question is whether moneyed interests are now more powerful than they are in a system without political accountability. I think that clearly they are not. In the system with accountability, interest groups have to buy off politicians. In Scott's system, they have to buy off the entire market. Even if feasible, the latter will surely be more expensive.
As I said in another comment, I don't think Scott's system will work, as much as I like it, because I doubt voters would get it and I really doubt politicians would want it. But I don't think it would benefit the rich.
Okay, explain to me how this works if everyone buys "yes" on "Biden will achieve his emissions reduction goal" and it does happen. So everyone who bet "yes he'll do it" gets a payout.
Where does the money come from? How does the firm running the market make a profit? I imagine the difference would be between those who bet yes and those who bet no, but what if everyone bets yes?
I find the easiest way to think about this (a bit simplified by abstracting from the dynamic aspect) is as follows. Everyone can put some amount of money on either yes or no. All the money is pooled together. (If there is firm running the market, they just take a cut of this money). Whichever side wins shares all the money in the pool, proportional to how much you put up. (so if A bet twice as much as B and they both got it right, A will get twice the share of the winnings.)
So, in the case you describe, if everybody bets on yes and yes happens, everyone will just get their money back (minus a the payment to the firm). There is a problem if no happens: in that case all the money should go to the "no" bettors, but by assumption there aren't any. This is however a silly possibility: anyone could bet an arbitrarily small amount on no and then get all the money if no happens. So this could never happen.
Notice that in the scenario that gbear605 describes, there will be bettors on both sides of the market: Exxon, manipulating the market, betting on yes and everyone else, understanding what is happening and making a handsome (unbounded...) profit, betting on no.
*I* don't need to be persuaded. It would be voters who don't have a clue what "online prediction markets" are, except what somebody -- presumably a demagogue who wants to sabotage the idea -- tells them they are. "A place where people with money to burn bet on political outcomes -- that's where they're telling you the President should find more people to whom to listen."
Does that sound like an easy sell to Jane Q. Public, single black mother employed as a municipal bus driver in St. Louis?
I agree fully with this point; in fact I argued it elsewhere in these comments.
Here I wasn't trying to persuade you that Scott's idea will work, I was only countering your point 1 and 2 that Scott's idea will increase the influence of money on politics. For the reasons discussed above in this thread, I don't think that is true and in fact, I think that effect would go the other way; i.e. it would decrease the power of money over politics. (I still think Scott's idea is infeasible for the reason you just mentioned.)
Sure, but remember I said explicitly I wasn't agreeing with the critiques, merely pointing that these would be made. It feels like one of those proposals of switching to cumulative voting or something that begin with "here, read this 18-paragraph Wikipedia article on the theory."
I think too many regular folks will feel like a clever scheme is being put over on them by the smart/wealthy/well-connected, and given the unusually low levels of trust in elections we have going on these days, that makes it a political nonstarter I would say.
Ok, fair enough! :) Then I vigorously wrestled to the ground the strawman you set up. I hope you enjoyed the show. :))
People didn't need a demagogue to tell them how to bet on horses. Or any sector of the economy. People naturally like betting, especially if you call it investing. Why is this different?
It's different because you're trying to persuade voters that the people the President should listen to *more* are the betting class. That is a marketing job I wouldn't take with a $10 million bonus.
He wouldn't listen to the betting class in any meaningful way. The original goal would have to be something that'd please the general population. The betting class just decides whether success is likely. There are only two possible outcomes - the betting class is accurate and they drive the execution of a goal you already liked, or the betting class is inaccurate, creating a vehicle to transfer their wealth directly to you. Which of these is bad?
The one where the betting class is inaccurate, and rewards the wrong actions of the President. Getting a few pennies from my bet doesn't compensate at all for the wrong policies being enacted by the President.
For example: the President says in order to meet CO2 goals, he's going to cut down all the trees in the national parks, because someone once said trees cause pollution and CO2 is pollution, quod erat demonstrandum.
Of course I'm horrified, but unfortunately the betting class either swallows the malarkey or is in the grips of a Russian/Chinese/Koch Brothers/Soros conspiracy, or on drugs, or pursuing a GameStop stock meme of such deep irony only Millenials grok it, and promptly bids up the price of a "yes" future, encouraging the President to yet more folly.
Yes, I can make a few bucks by betting against the market here, but that's not even remotely going to compensate for the President in effect "listening" to whoever can plunk down the most money in this weird little Internet betting parlor (which is how people will see it).
I think #2 is a stronger concern that you are giving it credit. Although it seems difficult to you at this moment, and you would likely make a lot of money in such a world, the system can definitely still be gamed.
One, it can be gamed in a kind of mundane way even in the exact mechanism you mention. Lets say that the "natural" environment of predictions says that Biden is likely to meet his goal by 2030, 53%. By putting a lot of money on a counterbet, his adversaries will tilt that number substantially. Even with lots of people buying up the "free money" options when it's 1%, that number will eventually go back up, and maybe sits at 45% instead of 53%. Now it looks like Biden is less likely to meet his goal. It's not free money from 45% to 53%, as even before the outside shocks Biden was almost equally likely to fail based on the prediction market. Betting enough to get it back to 53% would be expensive and quite possibly a losing proposition. Therefore the gaming of the system succeeded.
Two, you've made a measure of a goal the goal itself. There are lots of ways to affect that goal that have little to do with the underlying premises of his promise. For instance, you could hack the database. Or, more commonly, "make friends" with the owner of the prediction market and have them adjust the questions being asked to skew the results.
To make this work you would likely need billions of dollars on each question that are *not* ideologically spent, to set a baseline. You would also need very strong controls on who gets to ask the questions, who measures the response, etc. It would almost have to be a real part of the federal government.
I think you are giving prediction markets too little credit. Of course it's easy to game if you have the option to turn them into not prediction markets. But it's easy for anyone to check: if you can't easily put a good amount of your money in the market and trust that you'll get paid when the facts come out, it's not working as a prediction market (we currently don't yet have decent prediction markets for almost anything). It has issues but I don't think it's those. People wouldn't repeatedly waste millions of dollars to move a number from 53% to 45% for a few days, changing a small percentage of minds. And if they did, it would get more and more expensive every time they do and people catch up.
I think this misses the point. At least "cut carbon emissions 50% by 2030" is a SMART goal, but it's still just a goal. The issue here is setting a goal is only the first step in the long, hard process of moving from a vision to a strategy and breaking that down into operational details with their own SMART sub-goals. Problem decomposition. It involves too many unaligned actors all working at odds with each other, and that will remain the case no matter how you change electoral promise culture.
Proposing that a goal, instead of being SMART, be about prediction markets instead, is trying to incentivize politicians to actually do the further hard work of problem decomposition, since that is what would move a prediction market.
But this isn't just about incentives. It's about feasibility. The complaint here is it won't be possible to hold Biden to task if the 2030 promise isn't held, because he'll definitely be out of office and will probably be dead by then. But if a shorter timebound promise about prediction markets isn't achieved, I still don't see what voters can do. In the general election, you can vote for the GOP candidate, who isn't going to promise to move prediction markets in the direction of lower emissions, but also isn't going to promise to lower emissions, which is presumably what voters really care about. Trivially, a politician can just promise nothing and then never fail to deliver. But voters want them to at least try to move policy in the direction voters wish. Trying and failing is no worse in terms of outcomes than not even trying.
There's the primary process, but even there, what exactly is the stark contrast? No matter who you vote for, they're likely picking the same staffers and they're stuck with the same Congress and the same agency permanent staffs, and I don't think a ton of novel ideas are going to change because one candidate wins a nomination instead of another. This stuff is so heavily determined by the parties themselves at this point that even someone as prima facie radical as Trump was barely able to move outside of standard GOP policy actions, at least in terms of actual legislation, not Twitter outbursts.
So if the goal of your proposal is more churn in who holds office, maybe you'll achieve that. But if you're trying to create a political climate in which politicians will actually be better able to achieve long term goals, I doubt it. There's a lot more than bad electoral incentives preventing that.
I guess this is a roundabout way of saying I think the actual problem is that voters want the impossible. Biden knows damn well he won't do this, but politicians in general have no choice but to make impossible promises because voters want them to do things the present political system doesn't really allow. I don't believe holding them accountable for this would change things in a way that voters actually want. It would result in politicians who promise less, but what voters actually want is politicians that achieve more.
But promising an accurate amount actually adds to the democratic process. It adds a lever for "Look I think that's an admirable place we'd like to be but realistically that's just not going to happen, I may not promise the moon but I've achieved 85% of my modest pledges and you haven't achieved even 10% of yours". That is currently being shouted down as just not really believing in the goodness of the good thing.
I don't understand what you're trying to say here. Do you want politicians to say "SMART" things that are not feasible? What is the point of that?
It seems to me that that is how the system functions currently and that is how you get a democratic gap, where politicians say what voters want to hear and then do what they/interest groups/donors/the military industrial complex/the Illuminati (insert your preferred theory here :) ) want to do.
Half joking aside, I really don't see what the value is of having politicians say nice things that we all understand they will not and are not able to do and which are therefore totally unaccountable. I agree that with a 2 party system there still isn't much you can do with the information that a politician did not fulfill a pledge. But I don't think the response to that ought to be to do away with accountability altogether.
Fun idea. Moreover, if candidate pledges to move the target to 51%, and then you press them on why it hasn't happened, they will probably try to say, "well the market is just wrong / being manipulated / irrationally weighting unlikely risks / etc."
Which allows you to reply, "So how much of your own money have you put on the other side, so we can actually see your personal confidence in your own pledge?"
To which their natural rhetorical gambit will be, "Oh, but it's uncouth to gamble money on such things, and I'm offended you asked!" echoing the weird backlash that hit Nate Silver after he proposed a wager (for charity) with Joe Scarborough to make their confidence levels explicit.
At that point, though, if they're publicly rejecting the utility of prediction markets, then we can simply exclude the candidate from serious consideration (absent other overriding considerations).
Unlikely to have much effect on outcomes, given the microscopic size (and tbh lack of ideological cohesion) for the rationalist block. But might be self satisfying.
The actually somewhat valid rhetorical escape for the politician in that position would be, "It would be unethical for me to personally invest in the prediction market when I'm actively involved in shaping policy affecting the outcome."
I mean, it's not especially valid IMO. It's like athlete's betting that their team will win. While it's generally illegal, I can't see any conflict of interest or ethical issues; your bet is perfectly in line with your ethical priorities.
If he places his own money in the market, won't people accuse him of trying to manipulate the market to make his policies look successful?
Yes but aren't we going to accuse him of something similar anyway?
This whole idea is based on the premise that good prediction markets aren't easy to manipulate through betting. If one doesn't think that's the case, then this falls apart much earlier.
Hm, good point.
My ignorant view is that if prediction markets do become popular in the same way as the stock market, then like the stock market they will be influenced by large institutional investors. The ordinary joe with a few thousand or even hundred thousand to sit there for four to ten years waiting to see the end result is going to be out-competed by the firms that sink billions into it. This will lead to the same kind of lobbying of politicians by large concerns and that will have an affect on policies, and that in turn will affect the market.
If there is money to be made, there will be very strong incentives to get that money for yourself.
"At that point, though, if they're publicly rejecting the utility of prediction markets, then we can simply exclude the candidate from serious consideration (absent other overriding considerations)."
You're making a big assumption about which side of the argument public consensus will fall on. Joe Average is not a Very Online nerd who sees betting as a tax on bullshit.
I am fully aware this electoral strategy most closely resembles performance art. It's more emotive than impactful.
Any normative discussion of voting has the same problem, people don't actually vote that way, you can't fiat the electorate, so it doesn't work.
But, as the McElroy brothers say, "let's play in the space."
Imagine a rationalist voting bloc. It's silly and fanciful and probably immediately collapses to infighting, but fun nonetheless.
This feels related to (though not identical to) http://mason.gmu.edu/~rhanson/futarchy.html / http://mason.gmu.edu/~rhanson/futarchy2013.pdf, which Scott has also talked about before.
Also this novel from 1982: https://en.wikipedia.org/wiki/Courtship_Rite
The wiki page doesn't say so, but politics in a prediction-oriented government was central to the plot -- the head of state's title for instance was the Prime Predictor.
I'm reading this at the moment!
You walk up the escalator stairs so you can get into the Sandwich Club.
My objection isn't to the idea itself. If we really wanted to hold politicians accountable for their promises, then this is as good an idea as any I've heard. It'll never happen though. Obviously politicians have zero interest in being held accountable, but I don't see any evidence that voters have any interest in it either. Sure, there are activists who want to see results, but most voters these days would rather blame their opponents for obstructing progress. Actually making progress might get in the way of that, so they ignore all the broken promises.
I worry that's a key insight. Most voters want someone they can identify with, who embodies their undefinable aesthetic ideal of a good leader, in a way that isn't necessarily even internally consistent.
Finding more tools to "prove" policy commitments or effectiveness could still be useful in certain environments though, I'd hate to throw it out too hastily.
I think a prerequisite is just investing in more tools of political discourse that dissolve tribal attachments to specific policies.
I think Haidt(?) did some research asking participants to craft arguments for liberal policies using conservative values, and vice versa. I think it forced people to show in their arguments that they were considering the other side's point of view, which goes a long way to keeping people from getting entrenched.
Caplan's Open Borders (setting aside the object level question), has a really great meta-political tool called "keyhole solutions." They basically involve taking the critics of your proposal at face value and developing amendments that help hedge against the risks they predict, being sympathetic to those forecasted risks instead of just dismissing them out of hand (even if they are in fact misguided! because this is about building bridges by demonstrating a willingness to work together).
I think those plus steelmanning tend to improve discussions all for the same reasons, they demonstrate a commitment to the principle of charity, and a willingness to be persuaded or compromise with other views.
Won't work on every issue, of course, but more keyhole solutions and appeals to shared values could help more people get on the same side for pursuing certain sets of policies. Then a prediction market to validate those policies or a commitment to them would be much more valuable.
Yes, I really like some of Haidt's work in seeing how people can (or can't) accurately represent their opponent's position and reasoning. I think that if you can't make your opponent's argument in such a way that they would agree it's a fair description (even if you think they're completely wrong), you really aren't qualified to discuss the issue.
I mentioned this in another place, but I'll add more detail here. I think a lot of what Trump campaigned on was signaling about the types of decisions he would make and the interests he would forward when given the opportunity. The left tried to look at each claim he would make as if it were a concrete policy proposal, and then critiqued them as such. This had absolutely no impact on his supporters, which seems to have caused unbelievable amounts of angst within the news media and others. They couldn't seem to understand that Trump's support was not based on whether he did X, Y, and Z, but about who's side he was on.
Biden isn't going to do anything close to reducing emissions by 50% in the next 10 years. His supporters will appreciate anything he does to reduce emissions, even if they only go down 1%, because he's "on their side." They'll blame his opponents for refusing to pass his agenda, and give him credit for trying. Trump's supporters did the same about the wall, immigration, coal, manufacturing, whatever. His opponents refused to fund the wall, change immigration laws, fought him in court, and so on. He was visibly trying, that's what was important to his supporters. You can't yell at the core supporters "he didn't get what he said he would!" and expect them to drop their support. People on both sides know that their opponents have power and will push back, so "did he pass his full agenda y/n?" isn't even all that relevant. Everyone knows Bernie Sanders would struggle to pass anything close to his official agenda, not because he isn't serious, but because there would be a lot of opposition. He's still the best candidate to push that agenda forward and the obvious choice for his core supporters. It's not like them switching to voting for Hillary Clinton is suddenly going to pass their agenda! Trump supporters voting for Jeb Bush wouldn't have curbed immigration, because Jeb wasn't going to go after immigration in the first place.
I agree. Politicians are able to get reelected even if they fail to fullfill their campaign promises. Thus the penalty for making unachievable promises is very low.
People generally vote for candidates that have their own interests at heart. For example, "strength of the economy" often is the most important issue for voters according to polls. Policies that have long term benefits don't seem to be important to voters. Perhaps, a more effective approach (in terms of winning elections and achieving long term benefits) would be something like "achieving 51% likelihood of achieving long term climate goal, conditional on 100% short term likelihood of improving everyone's life"
> One way around this is to use a conditional prediction market - "what’s the probability that emissions will be below X, given that Biden's plan is enacted and stays in place until 2030?"
One problem is, if the probability the plan stays in place is close to 0, people have little incentive to place money-making bets, so the market gets dominated by people trying to move the numbers for political reasons.
Deciding if a play "stays in place" seems very complicated. Is Obamacare "still in place"?
The time value of money will severely reduce liquidity in longer-term markets if they're denominated in USD. Supposing you can earn 6% from an index fund, you need at least a 79% advantage on a 10 year bet for it to be worth betting. To get around this problem, the bets should be denominated in shares of SPY, or bitcoin.
Also I'm not confident the markets would be accurate even if they were perfectly liquid. I believe in an even weaker version of the efficient markets hypothesis than the one in the review of inadequate equilibria:
* Each new invention is sorta like a dollar laying on the sidewalk in Grand Central Station for years until someone finally picks it up.
* Historical bubbles and crashes where the markets were obviously wrong.
* Meme stocks like AMC and Gamestop get completely divorced from the intrinsic value of the underlying business.
Yes, it's essential that any cash betting platform invests the bets, to counteract the opportunity cost of having the cash.
I'd argue it should be invested in a low-risk asset, such as a money market, so that the bettors are not exposed to the volatility of markets and instead solely betting on the outcome of the event. For example, if SPY is used as the investment, it makes betting on any SPX outcomes horribly skewed (and any bets on the economy in general).
No matter what asset you chose for bets to be denominated in, some binary outcomes will correlate with the value of that asset, and therefore asymmetric payoffs will cause the market price to substantially differ from the true probability, even in a perfectly efficient market.
Example #1: suppose we have a market for contracts that pay $100 if CO2 emissions are reduced X% by 2040 if the president's plan passes. Suppose the president's plan is to print 10^22 dollars to tile the galaxy with solar panels. This inflation causes the contracts to pay off a lot less than $100 in real terms, so that the market price will rationally be far lower than the conditional probability.
Example 2: Same as above, except the contract pays $100 indexed to changes in the price of SPY, and the president's plan is to be funded by confiscating all the S&P 500 companies instead of printing 10^22 dollars. The market price will be zero regardless of the conditional probability.
This asset-correlation bias is inevitable, but the time-value bias is avoidable.
Predictit markets are heavily biased away from 0 and 100 due to the time value of money. This bias can be greatly reduced by indexing the contract payoffs to an asset that has competitive long-term returns. I don't think the short-term volatility of SPY would bias anything, except where the price of SPY correlates with the events we're trying to predict.
>Yes, it's essential that any cash betting platform invests the bets, to counteract the opportunity cost of having the cash.
Invest the bets in what? I'm guessing you mean something like T-bills or an index fund, but now we're talking about bets that are correlated with the future value of T-bills, index funds, etc. The reason we care about whether Biden posthumously cuts emissions by 50% or not, is because at least some of us believe that emissions not being cut by 50% means living in a Mad Max Post-Apocalyptic Hellscape. So the people that you need to honestly bet on the "No, we're getting the Hellscape" side of the proposition for accurate forecasting, are being asked to put real money into a decades-long wager where if they "win" the payout will be in basically toilet paper when they want a market basket of gold, canned food, and 5.56mm NATO.
Really, even a modest correlation between the proposition's central thesis and long-term ROI of index funds (or whatever) would likely skew the results substantially, but the apocalyptic version is more fun to talk about.
It needs to be a diverse basket of goods whose total value correlates with the general welfare, and then you can orient the questions so that the asset-correlation bias will be in the direction of avoiding policies that have negative impacts on the general welfare.
Dollars do some of that because hyperinflation scenarios generally correlate with bad real world outcomes.
Index funds do some of that because stock market crashes generally correlate with bad real world outcomes
Bitcoin does some of that (eventually) because bitcoin's future market cap will track the size of the global economy in the maximalist scenario. This provides broader exposure than an index fund. Although in the short term it'll be correlated to inflation fears which could be correlated with bad things happening.
Prediction markets will fail to correct proportional to the loss currently inherent in prediction markets: fees, inflation, loss of other potential returns, taxes on winning, regulations, and so on and so forth.
Yes, in the abstract, this idea would be fantastic. In viable real-world prediction markets, I suspect the friction involved would make objection #2 inevitable.
Look at the difficulties encountered by somebody who is at the literal pinnacle of understanding how to avoid prediction market friction: https://vitalik.ca/general/2021/02/18/election.html
> Second objection: once the prediction becomes a target, aren't a lot of people going to try to distort it in order to make their candidate look good or bad? Probably. This is why we need good prediction markets.
Prediction markets will just become a new form of PR, just like only the analysts, pundits and think tanks that agree with a certain politician are used in their campgains.
So Biden won't campaign touting a prediction that makes him look bad, but will tout ones that are phrased in just the right way to make him look good compared to other candidates.
Then prediction markets will also probably get flooded with cash from PACs, distoring the prediction accuracy. Political campaigns have a lot cash to burn, and if prediction markets become meaningful, they'll burn their money there.
Forgot to address your point: yes, prediction markets will give out free money in such cases, but why would the PACs care? They've served their PR purpose if they got their candidate elected. It still destroys their utility as a prediction market.
PACs care about re-elections
The next election will have a whole new war chest.
While I understand the intuitive appeal, there's a very, very, very obvious flaw in this plan:
> Second objection: once the prediction becomes a target, aren't a lot of people going to try to distort it in order to make their candidate look good or bad? Probably. This is why we need good prediction markets. If a prediction market is big enough and liquid enough, it should be robust against these kinds of distortion attempts.
Our _actual_ market is not resistant to these distortion attempts. More concerningly, a large amount of these distortions are _mandated by law_ and therefore inescapable within the United States.
If you started holding elected officials accountable to the results of a prediction market, I _promise_ you that arbitrary-seeming regulations on those markets will start getting passed that benefit incumbent politicians at the expense of newcomers.
You cannot engineer your way out of a public choice question. It can't be done. If someone claims to be accomplishing that, they are tricking you.
I think this is a wonderful idea. I'm skeptical that it would work in practice, because the idea strikes me as too subtle to capture the attention of a large share of voters. And if voters do not care, then why would politicians. Nor do I think it is in the interest of politicians to persuade voters of this idea. Politicians don't like accountability. But, assuming sufficiently rational voters, this is a very clever idea!
I just want to make a small remark about the first objection: I think that is really not a valid objection at all. You're essentially saying "what if Biden cannot do what he pledges, even if he really tries?". The natural response would be "don't make promises you cannot keep". So this is a feature, not a bug. (I understand that politicians may want to signal their intentions. But intentions are cheap - and hence bad signals.)
Oh, p.s., life expectancy at 78 for a man in the U.S. is 9.43 years. So there is a decent chance that Biden will live to see the failure of his promise. Not that it matters, of course. (I don't know how to adjust the life expectancy for his being the president. On the one hand, I expect presidents have access to above average health care. On the other hand, at about 1 in 11, they get assassinated at a far above average rate...)
Yeah, Scott. Freddie DeBoer wrote today that Trump will be dead in 5 years at 79. You’re making us older readers uncomfortable. ;)
The status of prediction markets needs to be raised first. I'd guess most American voters don't know what prediction markets are, and, that among those who do, less than half view them as meaningful. (Most people are not good at thinking in terms of percentages.)
Does Joe Biden even know what prediction markets are?
I sure doubt it.
This seems like you're primarily just fantasizing about a big public figure endorsing a thing that you like.
If ordinary people already took prediction markets seriously, then you could use them to hold Biden accountable whether he mentions them or not--in fact, in that case I suggest it's better if he doesn't, so that he avoids painting a bull's-eye on any single market that could be manipulated. The difference between that world and this world is that you're hoping that if Biden mentions Metaculus then more people will start taking Metaculus seriously.
(Also, it's really weird that you used Metaculus as your example when it is especially vulnerable to your objection #2.)
This feels like another instance of trying to find a technical solution to a social problem. If we geeks just develop the right technology/app/whatever, we can magically solve this big issue. (And I say this as a geek who tends to like technological solutions.)
Even if we successfully explain betting markets to the general public, even if we convince presidential candidates to make quantifiable pledges on said betting markets... none of this will make people care. They're still going to pick their presidential vote by whatever (irrational!) process they've been using all along.
Or maybe I'm just too cynical?
This would only work if voters would be willing to vote based on who delivered on promised prediction markets outcome, and I think it is pretty obvious they are not willing to do that.
Australia, Brazil and others failed in their climate targets presumably because while promising action on climate is popular with (part of) the electorate, steps that would actually achieve promised emission reductions would be horrendously unpopular, given current culture and technology.
> "In order to get Metaculus (or some alternative prediction market) to show a 51% chance of meeting emissions targets, Biden would have to pass a credible package of legislation that puts us on the path to achieving that goal, and makes everyone think it’s more likely than not."
This is making a very optimistic assumption; the actual easiest way to get Metaculus (or some other prediction market) to show a 51% chance of meeting emissions targets would be to either nationalize the target market, or to in some other way subvert the owners of the company to altering their algorithm to show a different number.
The point of making promised using measurements about the things you care about rather than proxies is that it limits your realm of options; in a similar manner, if your goal is to improve the quality of life for the majority of Americans by improving their economic status, you could set a target that actually measures that, or you could set a target of "increase the value of the stock market" assuming that that is a sufficient measure of economic quality for peoples' lives. However, stock prices generally speaking *don't* directly affect most peoples' lives, and thus setting a target to improve that number opens you to a range of activities that are good for improving that target number, regardless of whether that improves the measure you care about or actually makes it worse.
I don't think the voter base would treat those gotchas as a fulfilled promise, just as it doesn't really work to pledge a poverty of 1% and then lie with the stats.
I mean, that currently happens with things like the unemployment rate and the stock market, so I don't see why it would be any different? I admit that something like "nationalize the market" is less probable to be accepted, but "launch a new one that the government runs" is basically the same thing, and that seems pretty plausible in a world where people care at all about prediction markets.
It doesn't work if the *other side* is lying with stats.
But if *my side* does it? Well, you see, [5000 words], so we were right.
Yeah, I've never understood the hype around prediction markets. If they ever become influential, the government will make sure they don't stay that way.
However, this did give me an idea for a political comedy in which a socialist takes over a futarchy. "Markets are 99.99999% confident that the chocolate ration will be increased to 20 grams this month!"
Here's one way to bootstrap this. One year after a candidate makes a promise, the press could ask them how come the prediction markets aren't showing any confidence in said promises?"
This is the smart way to do it. If there are good prediction markets, then the savvy bits of the media could start using it to hold people accountable. There's no need for the politicians themselves to phrase their promises in terms of the markets.
This is basically what we do with all the economic indicators the Fed and NBER track. Politicians promise "I will improve the economy" and media then ask them "so why is unemployment rising?" or "why is inflation still stuck so low?" or whatever.
I'm worried there may be a bad interaction between problems 2 and 1.
If the Republicans put a few hundred million at the market to drive the market prediction down and that gets the Biden unelected, they could dismantle his policies making their manipulated policy come true.
Overall I'm still cautiously optimistic about prediction markets.
Anybody interested in learning about how prediction markets work, and what it feels like to participate in one (you suddenly get VERY VERY GOOD at putting a number on your gut feelings of probabilities)...
...you might be interested to play Murder She Bet! https://murdershebet.com/ it's a game where you get together with friends and watch a murder mystery TV show, and buy and sell bets (using fake money) on who you think did it 🙂
As the game goes on you get new information, you "update", and adjust your bets accordingly, at any given time the market price is a representation of the info the audience has, etc. Originally designed by Hanson, implemented for the web by me, over the last few months!
"If Metaculus gives a lower number than this, we can consider Biden to have failed in his pledge, and we can hold it against him when he tries to get re-elected."
And then we get the "Oh Look, A Squirrel!" strategy from the Democratic Party. I don't think Biden is going to run again in 2024 but whoever the candidate might be (Kamala Harris? U.N. Known?) the party will simply go "Okay, so we didn't hit the targets. But that wasn't our fault! And besides Metaculus is biased against us! And who are you going to vote for instead, a Republican? Yeah, right! Only Trump-loving Trump-supporting Trump-voting types would reject a Democrat President! If you don't vote for our candidate, then Trump has won!"
All these Accords Held In World Capitals are simply political games. The people are saying that Something Must Be Done, so this is Something. By the time the bill comes due, we'll be out of power. Or maybe the horse will have learned to sing.
"Suppose that Biden passed some very strong law banning all carbon emissions"
ALL carbon emissions? You really want to stick to that wording?
https://www.c2es.org/content/u-s-emissions/
"In 2017, the United States emitted 6.5 billion metric tons of greenhouse gases (CO2e). Carbon dioxide accounted for the largest percentage of greenhouse gases (82%), followed by methane (10%), nitrous oxide (6%), and other greenhouse gases (3%). Total U.S. emissions for 2017 totaled 6,457 million metric tons of CO2e and net emissions, taking sinks into account, totaled 5,743 million metric tons CO2e. Greenhouse gases are emitted by all sectors of the economy, including electric power (28% of total), transportation (29%), industry (22%), residential and commercial (12%), and agriculture (9%)."
Good news, people of America! You can no longer drive your car! Or take a bus to work! Or fly on an aeroplane! If you can't cycle or walk to where you want to go, too bad!
Also, forget about heating your homes unless you live someplace where solar panels actually do work as intended. Better hope there aren't any winter storms like Uri https://en.wikipedia.org/wiki/February_13%E2%80%9317,_2021_North_American_winter_storm and Viola! https://en.wikipedia.org/wiki/February_15%E2%80%9320,_2021_North_American_winter_storm
Oh yeah, and we're back to the days of lighting your houses by candles, because generation of electricity is as bad as transportation for emissions. Never mind, raw vegetables are the healthiest way to eat and we need to cut out meat anyway!
Yes, the above is very exaggerated. But when you say "ALL carbon emissions" that covers a *lot* of ground.
No exhaling, either.
Absolutely not! Just practice holding your breath, and if you die, well that benefits the planet as you are no longer emitting carbon yourself nor consuming products and services that emit carbon! 😁
"Perfect solution" fallacy.
No, if the president fails his prediction market pledge, of course they'll do their best to deflect and distract.
But that doesn't mean their failure will change *nothing*. Broken promises change minds at the margin, and there is value in widening that margin.
Biden is the first politician I've seen in a while who is taking the standard advice to under-promise and over-deliver, with all his vaccination claims - 1 million a day, and 100 million by the first 100 days, upped eventually to 150 million. Only the very last ask, of 70% of adults vaccinated by July 4, looks unlikely to be made, and that one was phrased as an ask, rather than a promise.
"Australia's 2009 Copenhagen summit pledge to decrease emissions 5% by 2020 (in fact, they increased 17%)."
Huh? I think you need to recheck your figures. Emissions are down, not up, on the Copenhagen context. The only sticking point is measuring Kyoto carry credits. Your results source covers only energy and cement production.
The relationship between whatever Australia was doing in 2009 and what it achieved in 2020 is also irrelevant to your thesis. Australia does not have term limits (Australia's longest serving PM spent 18 and a half years in office). The party which held power from the 2008 election produced a hung parliament in the 2010 federal election after infighting and lost convincingly in the 2013 election, in no small part due to the carbon tax it imposed in 2011.
Your examples must come from places with term limits to have any relevance to your thesis.
"Your examples must come from places with term limits to have any relevance to your thesis."
An absence of term limits means that a politician may seek re-election, it doesn't mean they are guaranteed to stay in office. His examples are relevant to the extent that the politicians leaving office was a probability. Certainty is not required.
I agree with your main point, about promises being hollow. However, your first example is incorrect. Australia's promise to reduce emissions included changes in land use (https://web.archive.org/web/20091027003859/http://climatechange.gov.au/~/media/Files/minister/wong/2009/media-releases/May/mr20090504c.ashx), whereas the data from Our World in Data excludes land use.
Australia including land use in its emissions counting is a consistent source of controversy.
I think a cousin of the third objection is: even if you *can* hold a president accountable to a campaign promise, it doesn't do much. I don't think presidents really bother trying to avoid setting goals they can't be graded on, so much as they aren't judged about hitting the goal in the first place.
I like the idea, but I don't think the problem is that presidents' promises can't be evaluated. It's that most voters don't pay attention or care about them, and even if they did, it almost certainly won't be enough to change their opinion to vote for somebody else.
For a lot of voters, this may well be rational behavior. There are 4 years between a candidate's promises in the 20XX election and when he gets judged by them. Who *actually* cares first and formost, in 20XX + 4, that the candidate has kept any specific promises? (I'm exempting general welfare promises like "things will be better!")
I submit it's a fairly narrow range of people, those with strong ideologies or specific long-standing concerns, who feel X or Y has gone on for years, is likely to still go on if nothing is done, and want something specific done *and* consider this much more important than any general situation of prosperity/recession, war/peace, and so on. These are pretty ideological people, and in some case narrowly-focussed axe-grinders -- anyway, not a majority.
There's a decent chance the majority in the middle just wants things to be better or at least not worse in some completely general way in 20XX + 4. That is, the economy should be better, their private wealth a bit higher, jobs should be no harder to find, the price of houses/cars/college should not have risen too fast, there should not be war going on that requires actual sacrifice, there should not be a rise in crime they experience, and so on.
*How* these things happened, and indeed whether the President had any real influence on them, in general doesn't really matter. These voters just say "if I'm happier in general, I vote for your re-election. Doesn't much matter how I'm happier." That's not to say voters don't like being given rationalization for their choices -- I think they do. So if the economy is humming along and wages are rising, they like for a politician to say "Things are sweet because I did X, so relect me and I'll continue doing brilliant things like X." And they like for X to be at least vaguely arguably related to their experience of a good economy, butr they don't insist on a well-founded provable link. It's just a rationalization that justfies what they would anyway do based on their feelings.
If nothing else, this is why a candidate can in 20XX say "Vote for me and I'll do X and everything will be great!" and then he can do Not X instead, and as long as things are actually going great in 20XX + 4, get re-elected by saying "I promised I'd do Not X and I did, and it worked out great! Four more years!" That gets opponents grinding their teeth and digging up old videos to say "See? See?! He said nothing of the sort! Watch the video!" but those kinds of arguments almost never work.
I thought of a better way to say this:
Governor Foo is running for President. The economy is in a shambles, crime is rampant, people are rioting in the streets about racism. Governor Foo makes a long list of very specific campaign promises, things he'll do if elected. They are generally popular, and arguably because of this list of promises, Foo is elected.
Four years later, for whatever reason, the economy is roaring, crime is on the run, and the streets are peaceful, except for itinerant mixed-raced troubadoors singing "Ebony and Ivory" to entertain the happy masses commuting to well-paid jobs. However, President Foo has kept exactly none of his campaign promises, has not even made plausible progress on any of them. When asked, he says he was naive and changed his mind, will implement none at all if he is re-elected.
Is there any plausible scenario in which President Foo is *not* re-elected? I think "no."
I ran a vaguely-similar idea by Robin Hanson earlier this year; aside from his work with Eliezer, he's also known as perhaps the most knowledgeable person around on the topic of Prediction Markets. The TL;DR of his feedback was, more or less: It could work, but only if someone has a strong incentive to pay for it. I got the sense that that was a very general objection and I get the sense that it's probably the main stumbling point here too.
I believe he says that a prediction market only needs somewhere in the order of $1M to be liquid enough to work. If Biden made pledges on a prediction market, that would certainly be enough to attract >$1M. Robin talks a lot about using prediction markets to make internal politics in firms more efficient, and that's perhaps where concerns about liquidity gets more pressing.
This seems poorly suited to the US political system in particular. In a country where the party that wins the election can do what it wants until the next election, your proposal addresses a democratic accountability problem with pledges the party makes about future outcomes. But in the US, the major democratic accountability problem is that so many different actors have a say in policy that voters don't know who to credit/blame for outcomes they like/dislike. If you create the expectation that the president is always responsible for meeting specified goals and that failure has real political consequence, you increase incentives for obstruction and sabotage. These perverse incentives already exist but making them an even bigger element of our system seems bad.
Excellent point on incentives. Though I would characterize this as checks and balances along the lines of those that the founders presciently intended, rather than obstruction and sabotage. IMO, government not being able to take action unless a supermajority agrees on it should be seen as a feature, not a bug.
"Stock markets can stay longer irrational than you can stay solvent" is a common saying among (value) stock investors.
So political prediction markets can surely stay longer irrational than politicians can stay in power.
Yes, people who recognize that irrationality might make a killing, just like Micheal Burry made a killing with shorting the housing market in 2008. That does not make the market sane.
I feel like you're underestimating the power a bunch of people have to move markets if they really want to. Look at Gamestop and AMC.
This proposal is based on the not entirely explicitly stated premise that Biden's pledge is a promise made by him personally to the American people. And having noted the problems with that interpretation, you conclude that people are just Not Doing It Right. However, another conclusion one could draw upon seeing how problematic interpreting such pledges as personal promises is is to conclude that such an interpretation is not correct. To wit, Biden is the democratically elected representative of The American People, and Biden, as an agent of The American People, is pledging on their behalf to cut emissions. In making the pledge, Biden is asserting that he will plan his policies around this being a priority, and he is committing The American People to either cut emissions, or have their country be on bloggers' lists of Countries That Make Emission Pledge That They Totally Didn't Fulfill. If the electorate feels that Biden should be accountable for how far the country has come by the time end of his first term, they are free to make such an evaluation and vote accordingly regardless of whether there's a prediction market.
How about "at least prediction market predicts that a majority of the population believes that Biden tried his very best to reduce emissions by 30%"?
Yeah, but that's just partisan politics as usual: "people who support Tweedledee believe he did his very best and was foiled by evil Tweedledum; people who support Tweedledum believe Tweedledee is an incompetent faker shoving the blame off onto Tweedledum to mask his failures".
Yes but this is a prediction market. So if I'm a staunch Republican who thinks Trump did his very best to make America carbon neutral, I cannot count on the loyalty of other Republicans to think the same. Hence, my best bet is to align my bets with the "truth", which I think will majorly influence the majority opinion
If you really want to have more responsive politicians -- and I'm not sure we do, there's a lot to be said for gridlock, unless you feel At One with the madding crowd 100% of the time -- then we should just do what business does: make executive pay largely bonuses. Every Presidential election year minus two we have a giant plebiscite in which The People vote on the bonuses they'll pay for certain objectives attained. Then everyone runs for office two years later and their pay is $0 (or whatever the practical de minimis is) + bonuses they achieve.
And if you *really* want to make the motivation effective on both sides, meaning both politicians and voters take the setting and achieving of goals seriously, then the way you vote for bonuses is you kick in your own money. So everyone who feels passionately about cutting CO2 emissions can throw $1000 of his own money into a pot to be divided among the Congressman, Senators, and/or President who achieve the specified goal within the specified time span.
“escalators can’t break, they can only become stairs”
Always assume that things can break more dramatically and more completely than you think they can.
https://www.youtube.com/watch?v=zM8q5tya6w4
https://www.youtube.com/watch?v=TFI5768nt-E
You're creating an incentive for people to bet billions that CO2 emissions will increase such that they lose money if that isn't the case.
Mix that with political hyper polarisation and that's a recepie for incentivise people to throw molotov cocktails into coal mines.
"If Metaculus gives a lower number than this, we can consider Biden to have failed in his pledge, and we can hold it against him when he tries to get re-elected."
An interesting proposition, but of limited utility since most people don't seem to base their assessments of politicians on hard facts, sound projections, etc.
This is pretty close to Hanson's futurarchy proposals but importantly different since the market is the output not an input to a decision (so you avoid the worry about manipulatability and predictability by other states).
I don't think any of the objections raised are that convincing but actually getting this to work seems impossible. We can't even get the SEC to approve a prediction market with enough liquidity with real money to even have an underlying market.
Also no way you'll get progressives not to distrust anything this market oriented.
1). This seems like a feature not a bug. Biden can't control what a successor might do but he can adjust the amount he pledges to move the price to account for this (if he can only impact chance of hitting goal by 5% pick that goal).
2). This isn't a problem as it just creates arbitrage opportunities provided the market doesn't cap participation or positions.
3). Pols already make promises about higher stock market values. What's the difference?
15% is so preposterous that I was driven to create a Metaculus account to downvote it. So you hae successfully applied Cunningham's law to boost their userbase.
Other egregiously mispriced markets I found with a casual scan: "Human-machine intelligence parity by 2040" at 52%, "Will any body of the US federal government conclude that COVID-19 originated in a lab in Hubei before June 1st 2022" at 39%, "Will 1 bitcoin be worth $100,000 or more before 2025" at 59%
The second objection seems the strongest here. Given the importance of political victory to millions of people, and the staggering sums of money involved, free money might not be enough to put things back to true estimates.
The first and third can be dealt with fairly easily - a promise that's too weak is a joke, not appealing.
But I think you missed the fourth argument. People can't even understand the stock market as a prediction market, and think of it as being some kind of random money-stealing machine. Even some very smart people. How on earth will you get a dorky niche site like Metaculus to become big enough to be relevant to big-league politics? I doubt you could even get the Andrew Yang campaign to try that - they'd think it'd make them look like dweebs, never mind someone like Trump or Biden.
I think your point is valid, but at least one of the facts you used is incorrect because Australia did meet its 2020 pledge target. The outcomes data you link to does not include emissions from land use change while Australia's target was for total emissions including from land use change.
1. This is needlessly complicated. Right now, if a politician makes an old-fashioned campaign promise, the sort of nerds and wonks who trust prediction markets can use prediction markets to evaluate whether those promises are being kept and the politicians in question should be reelected. And everybody else can use whatever it is they already use for the same purpose. So the current system can extract whatever utility prediction markets can provide, whether prediction markets are a fringe thing only a few nerds and wonks care about or something as revered as the NYSE, or anywhere in between. And it can *also* extract whatever value politicians and their constituents feel they are getting from traditional campaign promises, which by their actions they seem to feel is substantial. Your version provides value *only* to the extent that prediction markets are respected, which would seem to make it strictly inferior.
2. In addition to the prospect of the Evil Billionaires(tm) on the Other Side using their billions to drive the prediction market in a way that makes the incumbents look bad, there's also going to be the Gamestop Brigade doing the same thing, on both side. "Our Guy(tm) needs us to go invest in the Our Guy's Telling The Truth portfolio, and if enough of us do this and stay the course, Our Guy wins *and* we all make lots of money from the Evil Billionaires who thought they could manipulate the market! Let's do this!"
3. The Gamestop Brigade will do this, and the Evil Billionaires will be believed to have done this whether they did it or not. And in the end, some of them may lose a lot of money for having done it. But *until* the end, each side has a perfectly good excuse to say, "the market would totally have proven us right except for all those cynical market manipulators rigging the game", and nobody is actually going to e.g. vote Biden out of office because the prediction markets were putting him at only 30% to reduce carbon emissions.
Goodhart's Law and Campbell's Law are real. If you think prediction markets are useful, or likely to be come useful in the future, then don't do this because it will break them. Particularly don't do it now, or any time before prediction markets are as large and robust as the NYSE.
"And everybody else can use whatever it is they already use for the same purpose."
Which is "Did I subjectively do better or worse with Tweedledee in power rather than Tweedledum?" be that "did I get a pay raise, did my taxes go up, did he bravely defend reproductive justice rights/the rights of the unborn, is my house worth more or less", etc.
If people feel they have more money in their pockets, their pet causes are doing well, and things are pretty fine up here on the pig's back, they won't care a straw over a sub-set of stattos going "but he never hit the carbon emission targets he promised! the prediction market had him at only 30%! why are you voting him back in?"
Because he put more money in my pocket, duh!
I am intrigued by Scott Alexanders long-standing advocacy of prediction markets. He is an impressively clever guy, so I am totally open to the possibility that there is something vital about such markets I am too dim - or uninformed - to get.
...and with such an intro there is bound to be a but, of course.
Here is my but:
...but is not the only way a prediction market can yield important/useful information about what is likely to happen in the future, a prediction market limited to bettors that have SERIOUS skin in the game?
To elaborate: If betting is restricted to those willing to put 10.000 USD behind their bet (that's just a number - they point is that it must be a serious amount of money for most people), people are incentivized to put in information-gathering costs at least equal to USD 10.000, to have an "enlightened" opinion on what they are betting to happen.
If, by contrast, people can bet sums upwards from USD 1 (or even nothing), the whole betting schtick will be swamped by non-informed bettors who bet just for the fun of it. It will be impossible to distinguish the signal (the bets of seriously informed bettors) from the noise (the uninformed bets by everyone who participate just for the fun of it).
If I am right here, and we - to avoid that - limit betting to those wo have put serious money where their mouth is, we unfortunately run into another problem:
....Most policy-related decisions/events are driven by a ton of factors (think Brexit or the fall of the USSR), which make the random component of what is going to happen, much larger than in most business-related bets (will the share value of Amazon go up or down next year and suchlike). Implying that no sane, ordinary person will bet as much as USD 10.000 on any policy-related future decision/issue taking place.
...Which in its turn implies that you will get a selection effect, where the only bettors willing to back their bets by USD 10.000 or more, are either non-sane people (whose predictions you for a variety of reasons should not have much confidence in); or those rich enough to regard USD 10.000 as a trivial sum to spend just for the fun of it (whose predictions you should not have much confidence in either, since they are so rich they do not have an incentive to get themselves an informed opinion before they place their bet).
That's my problem(s) with the assumed usefulness of prediction markets. But again, Scott Alexander is an extraordinary clever person. What do I miss? Where do I go wrong in the above line of reasoning?
And for the record: I am not at all trying to be smug or anything! Really. I am genuinely interested in whether, and if so why, the above objections miss the mark; or whether there are some benefits to prediction markets I do not see, that trumps these objections.
I don’t think you missed anything.
one well-informed person betting $10k corrects against 10,000 uninformed people each betting $1. Next time around, the well-informed person has more than $10k because they earned a bunch of money on the prediction market (or they become an institutional investor with millions to play with).
A well-informed person will not be $10k on any position in any prediction market, because a well-informed person will know that actual prediction markets limit the maximum prediction to <<$10K. So long as that is the case, a well-informed person will know that it is not worth their while to keep their knowledge up to date to the point where they could make high-quality predictions, unless they are doing so for some completely different reason. The expected return from an ideal $800 PredictIt position is less than the value of the time required to make a high-quality prediction, and the number of people who will be in a position to make high-quality predictions for other reasons and will make a hobby of playing the prediction markets is probably insufficient to drive the market to efficiency.
In order for prediction markets to be efficient, they will have to have much higher limits. If they have much higher limits, they will attract a great many clever people who will be highly motivated to exploit them for their own private benefit, and not all of them will have the constraint, "...but only by making accurate and useful predictions". So, what do the prediction markets say about the probability of prediction markets being robust against the sort of manipulations that will be attempted against them?
Enlightening, including the follow-up observation, thanks.
I think first you would have to make the average voter aware that there is such as thing as prediction markets, what they do and how the current ones are weak. This should take at least the rest of Biden's first term (since I don't think the average voter knows already, this seems safe).
Also "figuring out how to prevent your successors from dismantling it". Judging by what currently is bulletproof, one needs to craft legislation that gives every legislator something. For instance, the current programs funding NASA seem to be mostly interested in funding something in every state that could block it. Or look at whose ox would be gored if any given welfare rule is changed - the ones that are not changed are the ones where any change hurts someone who can block the change.
It's a given that no Congress can bind the next Congress.
Also, something that's been bugging me this whole thread, is that "giving voters what they *really* want, good and hard" could well end up being a disaster, like inventing the Babelfish was.
Yes, credulity toward the proposition that humanity collectively ever learns anything from its experience rather suggests incredulity towards the proposer having learned something from his experience.
Trying to hold people accountable for their work results runs into all kinds of trouble, including campbell's law/goodhart's law. The more complex, and difficult to evaluate the work results are, the worse the troubles will be.
If we hold politicians accountable for a number of easily quantifiable goals, they will pursue these goals at the cost of everything else. And cook the books. And play all kinds of nasty games with blame-shifting and sabotaging their opponents.
I think we would get better results if we were to hold politicians LESS accountable.
I would love for this to work, but I think that looking at actual IRL stock markets suggests that it wouldn't.
Politicians do in fact pledge to grow the economy and stock market, but don't consistently do so. Instead, they claim success whenever it goes up and blame their opponents whenever it goes down. Since the economy follows semi-predictable but difficult to time business cycles, it's hard to say whether they're even having an effect or not.
In individual stocks, we see all sorts of BS. It's more profitable to try and cash in on a bubble than to short it. Stock markets seem to largely function as a Keynesian beauty contest with only occasional reality checks. "Crazy" fluctuations based on memes, passing news stories, people misreading the name of the stock, etc are *entirely rational for investors to buy into* as long as they think some fraction of people are idiots they can fleece, amplifying rather than suppressing the dumbest voices.
End result? At the end of Biden's presidency, some news story comes out that's bad for his climate targets. Rational investors judge that it's nonsense, but some fraction of people will believe it, so they buy tons of "Biden won't hit his target" contacts, sending the price soaring (and vice versa for the opposite contract). They're right, and morons start buying it, sending the price even higher. Trump supporters start a meme to #HODL "Biden plan won't hit climate targets", diamond hands will win Trump 2024! The price climbs to absurd levels suggesting Biden will personally destroy the planet; this becomes it's own news story, driving the price still higher.
Biden's term ends and he's narrowly reelected, but he blames his failure to hit the prediction market targets on Trump supporters gaming the market and other factors outside his control. Prediction markets are declared racist.
A year later, the smart money quietly sells at the peak of the market. The dumb money panics and sells, mostly at a loss, and the bubble collapses.
Prediction markets have enormous potential for good, especially if people could get interested in them to the same degree as meme-stocks.
In your discussion of Objection 2, you bring up endogeneity ("The Republicans will spend money to artificially deflate the prediction to make Biden look bad and lose re-election") but then seem to ignore it later on in the same discussion ("If the prediction market number is low, everyone will buy because it'll be free money!").
Won't it only be "free money" if the market ends up high enough for Biden to win and continue enacting his policies? Doesn't that in alter the prediction market into a dollar-based popularity contest, or possibly something with similar dynamics to a "dollar auction"?
This exercise assumes that Biden has honest intentions, that he cares about results more than optics. He does not.
No, that is not an endorsement of either Trump or Team R.
The first objection is a feature not a bug. Presumably, a market would put greater weight on policies with broad support and less weight on policies enacted by slim temporary majorities. Exactly the sort of compromise policy making that the wings of both (US) major parties have discouraged over the past decade or so.
Would this not produce a huge incentive for obstruction? It's almost like for this to work, we need to replace checks and balances with prediction markets?
Nitpick, but let me take issue with the claim that Biden will probably be dead by 2030. He is currently 78. According to this table (https://www.ssa.gov/oact/STATS/table4c6.html) he would be expected to live an other 9.37 years, which puts us well into 2030. He is probably healthier than the average 78-year-old, so I'd say he will probably still be alive in 2030.
When I explained to a friend how absurdly expensive the Green New Deal would be, she replied that it wasn't actually a real goal, it was like haggling--you always open with an offer you don't expect to be accepted. It also has to be too extreme in order to "motivate the base". Also, achieving politically divisive goals would reduce the fanaticism of your own side, and increase that of the other side.
Holding politicians accountable via prediction markets would be great, but I'm generally more worried about politicians achieving their stupid grand goals than about not achieving them. If by monitoring prediction markets as they monitor opinion polls, politicians learn how to achieve their goals, that could be a net loss.
"If a prediction market is big enough and liquid enough, it should be robust against these kinds of distortion attempts."
Prediction markets are robust against people trying to change them by *trading inside* the market, for exactly the reason stated (outcome A still pays off an expected ~$1, outcome B ~$0).
However, they are not robust against a credible promise to distribute a subsidy proportionately among holders of outcome B, because doing so legitimately changes the expected value of holding that position. To what degree it changes the price depends on how much capital is in (or can get into) the market, how credible the promise is, how many people hear about it in the first place, etc.
This can be combined with taking a position in whatever the prediction market controls, if it's directly hooked up to something of interest, to pump more than enough money out of the system to cover the subsidy plus profit. E.g. there used to be calls to replace the Fed with a prediction market -- in that case, one can take a position in the forex market and then subsidize the predictiFed to pull the price in the appropriate direction.
"Imagine Biden pledges that some prediction market will have a 51% chance of reaching his 2030 emissions target by the time he leaves office. He passes a carbon tax, and the market shoots up from 15% to 30%. Now he knows he’s on the right track, but still has to do more. So he bans a bunch of coal power plants, and it goes up to 45%. He's still not quite there, so he gives big subsidies to solar panels a few days before the campaign season kicks off, the prediction market reaches 51%, and he's able to say he fulfilled his pledge."
This feedback loop is almost entirely blunted if predictors expect Biden to actually care about the prediction market. Once Biden makes that pledge, the prediction market should take it mostly for granted that he's going to take reasonable measures to hit the goal (if possible). If your example's numbers are reasonable absent a pledge, then the market should take for granted that he'll pass a carbon tax, etc. Just making that pledge will cause the market to trade way over 15%, over 30% if he's perceived as serious. If he passes the carbon tax and the market just sits still at 45%, it doesn't provide him much information. If he passes a useless bill, maybe the market ticks down from 45% to 44% or something, but it should price in that he's going to come around to a better bill eventually.
"accept that part of the work of making a global warming plan is figuring out how to prevent your successors from dismantling it"
There is the issue that this would create an even stronger incentive to find ways to lock in policies in ways that violate the spirit of the Constitution or law.