I’ve repeatedly debated with Tyler Cowen about the epistemic value of betting.  Long before I amassed my 21-bet winning streak, I’ve argued that betting about substantive intellectual questions does all of the following:

1. Greatly improves the quality of our thinking by converting vague, ambiguous language into clear, specific claims.

2. Greatly improves the quality of discourse by incentivizing the rationally ignorant and rationally irrational to mute themselves.

3. In the long-run, creates track records that greatly enhance even casual observers’ ability to discover reliable thinkers and dismiss unreliable thinkers.


Tyler’s rebuttal has long been a variant on, “If you’re so smart, why aren’t you rich?”  If you really know more than other people, you shouldn’t waste your time making bets.  You should take your knowledge to financial markets and make a killing.  Anyone who fails to do so isn’t really epistemically exceptional, no matter how many bets they’ve won.

For my part, I’ve always considered Tyler’s reply quite weak.  Rebuttal to his rebuttal: Many major intellectual issues simply aren’t financially helpful to resolve.  Suppose you could demonstrate that intelligent alien life exists in another galaxy.  An amazing discovery, yet it’s hard to see why financial markets would care in the slightest.  This wouldn’t be true, of course, if “Existence of intelligent alien life proven” securities existed, but they don’t.  Even the best-developed financial markets focus on a tiny sliver of logical space.  Exchanges fret far more about pork bellies than life extension.  In any case, the world is so complex that you can perfectly understand a wide range of relevant issues but still go bankrupt investing on your knowledge.  Suppose, for example, you knew exactly how much petroleum Earth contained.  An amazing feat, but it’s far from clear that you could make money off of this knowledge.

At this point, you might reply, “Knowledge of a few facts won’t ensure riches.  Still, anyone who knew a lot of important facts could easily become a billionaire.”  Plausible, but is it true?

I fear not.  Consider this hypothetical: Back in March, you acquired omniscient foresight for all of the following variables: The GDP of every country on Earth; the unemployment rate of every country on Earth; total spending by country on consumption, investment, government purchases, transfers, exports, and imports in every country on Earth; and the true coronavirus infection and death rates.  Suppose that, armed with this godlike knowledge, you tried to predict where international stock markets would stand today.

What would you have predicted?

Personally, I would have expected stock markets to fall by at least 2/3rds, and remained around that low level.  I’m not alone, as this Twitter poll shows:

In reality, global markets have almost fully recovered.  With 20/20 hindsight, maybe this will make sense, but I remain utterly confused.  What I do know, however, is that omniscient foresight about a long list of macroeconomic variables wouldn’t have made me rich.  Indeed, I could easily have lost everything; full of hubris in my god-like knowledge, I might have leveraged all my assets to short global markets.  Only too late would I have found that omniscience is not enough.  You can have flawless knowledge of the macroeconomy yet dangerously unreliable knowledge of the financial economy.

One could protest: “You could have made a killing if your omniscience extended to specific firms.  Imagine if you perfectly foresaw how much people would start buying from Amazon.”  That sounds right, but reinforces my main point.  Namely: The market poorly rewards deep, accurate knowledge of the Big Picture.  If you want to get rich, you’re better off knowing the right kinds of trivia.

Not convinced?  Ask yourself: If you wanted to get rich, which would you rather know: The release date for the first coronavirus vaccine – or the name of the company that discovers this vaccine?

If you care about the Big Picture, when is obviously vastly more important than who.  If you’re looking for a mountain of gold, however, who is vastly more important than when.

Last question: Isn’t it comically convenient for me to claim that I just-so-happen to have great knowledge of the Big Picture, but mediocre knowledge of how to become a billionaire?  No, because the tournament to gain great knowledge of the Big Picture is much less competitive than the tournament to become a billionaire!  The world is packed with brilliant people who desperately want to become fabulously rich.  The quest to grasp the Big Picture, in contrast, is only a nerdy hobby.  In a world where 10% of MIT and Caltech graduates devoted their lives and egos to public betting, my betting record would be lost in the shuffle.  The reason I’ve excelled, in short, is that most of the thinkers able to out-run me neither know nor care that there’s a race.