Getting to Bet
By Bryan Caplan
In the comments, Patri Friedman points out that Barry Ritholtz has already offered a $1M bet that the bail-out loses money. Alas, though I agree with (and even chuckle with) Ritzholtz’s conclusion, this is not yet a serious bet. Problems:
1. He names no clear way to measure the bail-out’s cost ex post.
2. He doesn’t name a time frame.
3. He doesn’t give a specific number. Exact wording: “I bet you one million dollars, to the charity of the winner’s choice, that the current plan is ginormous money loser.” Ginormous is not a number.
4. Paradoxically, a million dollars is too big for a serious bet! Virtually no one could seriously accept; and even if they did accept, how do you propose to collect a million-dollar payment on a transaction that is, technically speaking, illegal? For a few hundred to a few thousand dollars, public humiliation is enough to make an established pundit pay up. But almost anyone would try to weasel out of a million-dollar bet. For practical purposes, a $1M is about as helpful as offering to to bet a “ginormous sum.”
If I’ve missed subsequent refinements of this bet, I apologize. But at least as far as I can tell, we still need to hammer out a serious bet on a bail-out. If someone can suggest a neutral way to measure how much the bail-out recoups in the next ten years, I’d like to hear it ASAP.