On Nate Silver and Predicting Elections: Betting is a Tax on Bullshit

Yesterday, The New York Times math/election guru Nate Silver offered, via Twitter, to make a $1,000 election bet with MSNBC host Joe Scarborough on who would win the 2012 U.S. Presidential Election.  Silver’s overlords at the New York Times were not pleased. From their Public Editor Journal:

Whatever the motivation behind it, the wager offer is a bad idea – giving ammunition to the critics who want to paint Mr. Silver as a partisan who is trying to sway the outcome. It’s also inappropriate for a Times journalist, which is how Mr. Silver is seen by the public even though he’s not a regular staff member. “I wouldn’t want to see it become newsroom practice,” said the associate managing editor for standards, Philip B. Corbett. He described Mr. Silver’s status as a blogger — something like a columnist — as a mitigating factor. Granted, Mr. Silver isn’t covering the presidential race as a political reporter would. But he is closely associated with The Times and its journalism – in fact, he’s probably (and please know that I use the p-word loosely) its most high-profile writer at this particular moment. When he came to work at The Times, Mr. Silver gained a lot more visibility and the credibility associated with a prominent institution. But he lost something, too: the right to act like a free agent with responsibilities to nobody’s standards but his own.

Alex Tabarrok counters and thinks that betting is a good idea, a way to put your money where your mouth is:

My best parse of the argument is that by betting Silver has given himself an interest in the election and this hurts his credibility. Nothing, however, could be further from the truth.

A properly structured bet is the most credible guarantor of rigorous disinterest. In order to prove his point, Silver is not required to take the Obama side of the bet! At the odds implied by his model (currently between 3 and 4 to 1) Silver should be willing to take either side of a modest bet. Indeed, we could hold a coin toss, heads Silver takes the Obama side, tails he takes Romney.

In fact, the NYTimes should require that Silver, and other pundits, bet their beliefs. Furthermore, to remove any possibility of manipulation, the NYTimes should escrow a portion of Silver’s salary in a blind trust bet. In other words, the NYTimes should bet a portion of Silver’s salary, at the odds implied by Silver’s model, randomly choosing which side of the bet to take, only revealing to Silver the bet and its outcome after the election is over. A blind trust bet creates incentives for Silver to be disinterested in the outcome but very interested in the accuracy of the forecast.

Overall, I am for betting because I am against bullshit. Bullshit is polluting our discourse and drowning the facts. A bet costs the bullshitter more than the non-bullshitter so the willingness to bet signals honest belief. A bet is a tax on bullshit; and it is a just tax, tribute paid by the bullshitters to those with genuine knowledge.

Fantastic.

As of this writing, Joe Scarborough has not agreed to the bet. But he should.

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