What Does the Betting Norm Tax?
believes that scholars should be ashamed if they do not publicly bet
their views. In contrast I fear this requirement would become a tax
My knee-jerk reaction is to say, “Yes, a tax upon false ideas.” My second thought is to say, “No, it’s also a tax upon thinking out loud.” My third thought is to say, “Not quite. It’s also a tax upon thinking out loud – and then refusing to back down when listeners offer constructive criticism.”
How would you feel about an obligation (if only a moral one) for
scholars and commentators to publicly reveal the content of their
investment portfolios? Those portfolios are their real bets.
Portfolios are “real bets” about a narrow range of tightly bundled questions. When I hold an index fund, for example, I am simultaneously betting on the quality of economic policy, the resilience of the economy, the average risk premium, etc., but only as they relate to the price of stocks. The beauty of the betting norm is that it opens up a much wider range of individually-wrapped questions.
Of course, if a scholar or commentator makes claims about what financial markets are going to do – or offers general advice about prudent investing – I think it’s entirely appropriate to ask them about the content of their investment portfolios. “But… that would be a tax upon hypocrisy!” Precisely.