By: Franca Driessen,
on 4/18/2016
By any common definition, Trump’s statements and policies are racist. Yet we are researchers on implicit bias—largely unconscious, mostly automatic social biases that can affect people’s behavior even when they intend to treat others fairly regardless of their social group identity.
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By: Yasmin Coonjah,
on 1/6/2016
Economists are better at history than forecasting. This explains why financial journalists sound remarkably intelligent explaining yesterday’s stock market activity and, well, less so when predicting tomorrow’s market movements. And why I concentrate on economic and financial history. Since 2015 is now in the history books, this is a good time to summarize a few main economic trends of the preceding year.
The post Economic trends of 2015 appeared first on OUPblog.
By: DanP,
on 11/5/2014
Autumn is high season for American political junkies.
Although the media hype is usually most frenetic during presidential election years, this season’s mid-term elections are generating a great deal of heat, if not much light. By October 13, contestants in 36 gubernatorial races had spent an estimated $379 million on television ads, while hopefuls in the 36 Senate races underway had spent a total of $321 million.
For those addicted to politics, newspapers and magazines have long provided abundant, sometimes even insightful coverage. During the last hundred years, print outlets have been supplemented by radio, then television, then 24/7 cable TV news. And with the growth of the internet, consumers of political news now have access to more analysis than ever.
One analytical tool that the politics-following public will not have access to this year is Intrade, an on-line political prediction market. Political prediction markets work very much like financial markets. Investors “buy” a futures contract on a particular candidate; if that candidate wins, the contract pays a set amount (typically $1); if the candidate loses, the contract becomes worthless. The price of candidates’ contracts vary between zero and $1, rising and falling with their political fortunes—and their probability of winning. You can see a graph of Obama and Romney contracts in the months preceding the 2012 election here.
Organized political betting markets have existed in the United States since the early days of the Republic. According to a 2003 paper by Rhode and Strumpf, during the late 19th and early 20th centuries wagering on political outcomes was common and market prices of contracts were often published in newspapers along with those of more conventional financial investments. Rhode and Strumpf note that at the Curb Exchange in New York, the total sum placed on political contracts sometimes exceeded trading in stocks and bonds.
Political betting markets became less popular around 1940. Betting on election outcomes no doubt continued to take place, but it was a much less high-profile affair.
Modern political prediction markets emerged with the establishment in 1988 of the Iowa Electronic Markets (IEM), a not-for-profit small-scale exchange run by the College of Business at the University of Iowa. The IEM was created as a teaching and research tool to both better understand how markets interpret real-world events and to study individual trading behavior in a laboratory setting. The IEM usually offers only a few contracts at any one time and investors are allowed to invest a relatively small amount of money. As of mid-October, the Iowa markets—like the polls more generally—were predicting that the Republicans will gain seats in the House and gain control of the Senate.
An important feature of political prediction markets—like financial markets—is that they are efficient at processing information: the prices generated in those markets are a distillation of the collective wisdom of market participants. A desire to harness the market’s ability to process information led to an abortive attempt by the Defense Advanced Research Projects Agency in 2003 to create the Policy Analysis Market, which would allow individuals to bet on the likelihood of political and military events—including assassinations and terrorist attacks–taking place in the Middle East. The idea was that by processing information from a variety disparate sources, monitoring the prices of various contracts would help the defense establishment identify hot-spots before they became hot. The project was hastily cancelled after Congress and the public expressed outrage that the government was planning to provide the means (and motive) to speculate on—and possibly profit from–terrorism.
Another, longer-lived—and for a time, quite popular–prediction market was Intrade.com. This Dublin-based company was established in 1999. At first, it specialized in sports betting, but soon expanded to include an extensive menu of political markets. During recent elections, Intrade operated prediction markets on the presidential election outcome at the national level, the contest for each state’s electoral votes, individual Senate races, as well as a number of other political races in the US and overseas. Thus, Intrade offered a far variety of betting options than the IEM.
Intrade was forced to close last year when the US Commodities Futures Trading Commission (CFTC) filed suit against it for illegally allowing Americans to trade options (by contract, the IEM secured written opinions in 1992 and 1993 from the CFTC that it would not take action against IEM, because of that market’s non-profit, educational nature). The CFTS’s threat to Intrade’s largest customer base very quickly led to a dramatic drop-off in visitors to the site, which subsequently closed. Alternative off-shore betting markets have entered the political markets (e.g., Betfair), but their offerings pale by comparison with those formerly offered by Intrade and are probably too small at present to spur the CFTC to action.
I regret the loss of Intrade, but not because I used their services—I didn’t. Given the federal government’s generally hostile view toward internet gambling, I felt it was prudent to abstain. Plus, having placed a two-pound wager on a Parliamentary election with a bookmaker when I lived in England many years ago convinced me that an inclination to bet with the heart, rather than the head, makes for an unsuccessful gambler.
No, I miss Intrade because it provided a nice summary of many different political campaigns. Sure, there are plenty of on-line tools today that provide a wide array of expert opinion and sophisticated polling data. Still, as an economist, I enjoyed the application of the mechanisms usually associated with financial markets to politics and observing how political news generated fluctuations in those markets. No other single source today does that for as many political races as Intrade did.
Feature image credit: Stock market board, by Katrina.Tuiliao. CC-BY-2.0 via Wikimedia Commons.
The post I miss Intrade appeared first on OUPblog.
By: Elvin Lim,
on 11/15/2011
Mitt Romney must be the happiest Republican in the world. His political rivals for the Republican presidential nomination, Herman Cain and Rick Perry, seem to be trying to out-do the other in terms of whose campaign can implode faster.
Let’s start with Rick Perry’s campaign. Now we know why his campaign advisors were telling him to skip upcoming debates. Perry’s “oops” moment in Wednesday’s debate will enter into the political hall of infamy because that was the moment when his sponsors will realize that he is just a bad investment. If Perry cannot think just one sentence faster than he can talk, he will be demolished by a law professor when they debate next year.
Perry’s gaffe’s was probably a godsend to Herman Cain, but it would be little relief in the worst week of his campaign yet. It doesn’t matter if the accusations of sexual harassment are true because they are now distractions to Cain’s message, which he was already struggling to explain. And then he had to go call former Speaker Pelosi “Princess Nancy.”
Sarah Palin wasn’t an aberration in a line of competent Republican candidates from Eisenhower to Nixon. She is the new rule. The thing about modern conservatism is that it has become so anti-establishment that it now happily accepts any political outsider as a potential candidate for the highest office in the land. Political outsiders aren’t tainted by politics, by Washington, so we are told. But, by the same token, they can therefore also make terrible candidates.
The irony, of course, is that the slew of debates being held this year was meant to give voters greater choice and knowledge of the candidates’ positions. But all this is doing is reinforcing the front-runner status of the establishment candidate. There is a reason why Mitt Romney and his perfect haircut has coasted through the debate without any oops moments. He’s a professional politician! Tea Partiers are going to have to come to the uncomfortable realization that it takes one professional politician to beat another.
One relatively unmentioned reason why Mitt Romney is still hovering at 25 per cent is because in 2010 the Republican party changed the nomination rules away from winner-takes-all so that states (except the first four) would allocate their delegates proportionately to the candidates at the national convention. This has the effect of giving less-known candidates more of a chance of lasting longer in the race than they normally would, but the unintended consequence is that Republican voters will have to watch their candidates battle it out, and even suffer the potentially demoralizing conclusion that in choosing their candidate, they must follow their mind, not their hearts.
It is far from clear, then, that 2012 will be a Republican year. Conservatives have yet to explain away a fundamental puzzle: if government is so unnecessary, so inefficient, and so corrupt, why seek an office in it? This is possibly why the very brightest and savviest would-be candidates are in Wall Street, and can’t be bothered with an address change to Pennsylvania Avenue. Except Rick Perry and Herman Cain, of course.
Elvin Lim is Associate Professor of Government at Wesleyan University and author of The Anti-intellectual
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