Terrorism Betting Markets: Inquiring Minds Know
By Bryan Caplan
A new working paper by Robin Hanson observes: “When a controversy erupts in the media, and widely differing views are expressed, it is natural to wonder which opinion is the one more favored by those who are most informed about the topic.” At least it’s natural for me.
If you followed the controversy on the Policy Analysis Market (PAM) – popularly known as “terrorism betting markets” – you might have noticed a pattern in the media coverage: The more immediate the publicity, the more negative. Initial reports by daily media heaped scorn on the idea; the lower-frequency media was more favorable. At least that’s how I saw it.
At long last, there is now hard data confirming my casual impression. In Robin Hanson’s new working paper, The Informed Press Favored the Policy Analysis Market, Hanson reports systematic econometric evidence on media coverage and terrorism betting markets. Independent raters assessed the positivity of 396 pieces of media coverage on a 7-point scale, from least favorable to most favorable. A positive attitude correlated with ALL of the following signs that the journalists involved knew what they were talking about:
1. mentioning someone with firsthand knowledge
2. time since the media firestorm
3. article length
4. a news versus an opinion style
5. the periodical’s prestige
6. the periodical’s frequency
The most natural interpretation is simply that the more the journalists knew, the more favorable their attitude toward terrorism betting markets.
Hanson’s closing remark is particularly fascinating:
Unfortunately,public policy regarding PAM continues to reflect the uninformed opinion, a situation that seems unlikely to change anytime soon.This should give pause to those who think that our democratic processes can effectively produce informed policy, even when the electorate is highly uninformed. In this case, as in many others… policy reflects the uninformed position.