On putting your money where your mouth is

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Alex Tabarrok comments on the implications of people's willingness to wager over global warming:
Inspired by Robin Hanson's work on betting markets, James Annan, a climate scientist, has been trying to get skeptics of global warming to put up or shut up, mostly with no success on either front.  A number of prominent skeptics refused to bet (perhaps having learnt from Paul Ehrlich's embarassment) or offered to bet only at very high odds in their favor (i.e. implicitly admitting that they thought the probability of global warming was high).  The failure to bet is telling and a nice reminder that even markets with no trades can tell you things of importance!

I don't think it's a safe conclusion to draw that people's unwillingness to bet means that they think there's a high probability of global warming. The disutility of losing this bet is substantially higher than the money, since you're made to look foolish (which is, of course, exactly what happened to Ehrlich, and this bet is constantly used to discredit him). By contrast, the benefit one gets from winning the bet and being shown right probably isn't close to the same utility. (Meaning that people wouldn't take a bet even if the chance were 50/50). It seems to me that even if global warming is not occurring1 there's an appreciable chance that the temperature will go up purely as a matter of random chance, so this asymmetry implies that the acceptable odds have to be fairly high.

1. Note: I'm not saying that I don't think it's occurring. I don't have any kind of useful informed opinion on this topic, but it seems perfectly clear that that's the scientific consensus so that's clearly the way to... er... bet.

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3 Comments

It's interesting to see these bets, but ultimately they aren't too informative. All it tells us is that both sides believe enough in their cause to put some money down (or maybe they don't expect to pay up for a variety of reasons). What we need is a set of long term futures markets such as Robin Hanson envisioned, with many traders involved who are setting market prices by betting on various outcomes. This would provide much more information about consensus odds on various events than reports of a few people making a bet.

This is a test comment.

Alex Tabarrok writes: "A number of prominent skeptics refused to bet (perhaps having learnt from Paul Ehrlich's embarassment) or offered to bet only at very high odds in their favor (i.e. implicitly admitting that they thought the probability of global warming was high)."

The demand for high odds is not an admission of probability. It is a reasonably request to determine the certitude of the human (US) caused global warming proponents. There are so many scientists and media "experts" and now Presidential hopefulls chiming in, that I think the handicapping is fine, considering the political and monetary capital, and perhaps lost productivity the "American SUVs destroy the Earth" folks are already betting.

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