Friday, March 28, 2003

Gambling on Saddam, part 2

Earlier on this blog I criticized this analysis on Wired of online gambling on the outcome of the war in Iraq:

Although the dollar sums wagered in electronic markets are minuscule in comparison to the volumes traded on traditional financial markets, Wolfers believes they are telling indicators of political events. Unlike political pundits, he says, traders put their money where their mouths are.

"In the financial markets, political posturing will put you at nothing but a loss," he said.

Today a much better analysis surfaced on CNN:

"What's great about a financial market is you've got to put your money where your mouth is," Zitzewitz said. "It's a reasonably good proxy for what the average person thinks based on publicly available information."

This is much more reasonable. Notice the difference between "telling indicator" and "reasonably good proxy" of what people think based on publicly available information. Which reminds me, the media loves opinion polls. I just saw a report explaining what percent of Americans thinks the war will end within 3 months. The media loves to tell us about the predictions made by the average person, but the media also tells us that the average person can't find Iraq on a map! Why announce the predictions of the uninformed?

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