And as they round the first turn, it is Bernanke out front, with Feldstein and Hubbard trailing by two lengthsAll economists love markets. Most economists hate gambling. So I don’t know whether or not to be surprised by the fact that my friends at tradesports are offering a line on which economist will be the next Chairman of the Federal Reserve. (At Tradesports, go to the trading screen and search under “Current Events – Federal Reserve.”
Consistent with the idea that economists hate gambling, the total value of all contracts traded so far by all market participants is less than I bet on a typical football game.
If you want to call this a market given how little trading there is, what does the market think? Ben Bernanke is the odds-on favorite with his chances placed between 55 and 60 percent. Glenn Hubbard is #2 at about 25% and Martin Feldstein at about 18%.
The market maker in this market must be an economist. At the current “ask” price, he or she is willing to take up to a $3 bet (wow, now that is taking some risk) that any of the contenders will lose if you are willing to pay the price. And at the current ask price, the cumulative odds of the various contenders winning sums to more than 200%. You can get better odds playing the lottery than betting across the board on the various contenders to win.
Do you remember when Poindexter wanted to create markets in things like whether the Israeli prime minister would be assassinated? Markets like the Federal Reserve Chairman and assassinations are rife with private information. It is hard to believe that they could ever work very well, or attract sufficient trading volume to make them a useful information aggregator.
But at least they give economists something to blog about.