Twilight of My Liberal Idol
By Bryan Caplan
I’ve been singing Krugman’s praises for years. Anyone who could write The Accidental Theorist has a lot of credit in my bank. But his latest column on the failure of betting markets is so beneath him, it hurts to read:
[P]rediction markets — which you see, again and again, touted as having some mystical power to aggregate information, know no more than the conventional wisdom.
I can only shake my head and wonder how any statistically literate thinker can say such things. There is ample evidence that prediction markets have better average performance than almost anything else. To dismiss prediction markets on the basis of a few high-profile failed predictions is just demagoguery.