How to Become an Insta-Expert: A Confession

On?Thursday, I left you with my Oscar picks:

the only close race is Best Picture, and the markets give a slight edge to The Hurt Locker, over Avatar. The other awards are easier picks:?Jeff Bridges will be best actor;?Sandra Bullock will be best actress (as much as I disliked her performance in The Blind Side);?Christoph Waltz is a lock to win best supporting actor;?Mo’Nique will surely win best supporting actress; and?Kathryn Bigelow will beat her?ex-husband to win best director.

It’s time for me to confess: I’ve barely seen any movies this year, and know little about the industry.? But I didn’t want to get left out of the water-cooler conversations about the Oscars.? And so these forecasts were simply a fun application of prediction markets.? By quickly scanning the latest market prices, I managed to become an insta-expert.? In fact, I managed to become such an insta-expert that I’ll be returning to the water cooler today to gloat about my successful picks in all the major award categories.

You can try the same thing.? Can’t be bothered with college basketball?? Check out the prediction markets ahead of March Madness, and you can be sure that your bracket will at least look informed.? Politics bores you?? Forget Politico and FiveThirtyEight; simply follow the markets and you’ll be an insta-expert.? Having trouble tracking the economy?? Follow the futures.? In basically no time at all, you can become expert on just about everything.? It’s all about listening to the wisdom of crowds.

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  1. Devon says:

    Hope you applied your predictions to some friendly wagers.

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  2. Michael says:

    Umm, no. This is a perfect example of how Freakonomics writers tend to be obsessed with their own cleverness. Prediction markets are a great tool, and I agree that they tend to be more accurate than other statistical and empirical tools in certain situations, but they’re ultimately derivative, and rely on the aggregated “expertise” and “wisdom” of ACTUAL experts.

    Maybe we should all stop developing expertise and just rely on our own collective non-wisdom, as if the markets aren’t tautological enough already.

    Sorry, FAIL.

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  3. Dan Stewart says:

    Irrespective of your methods, you deserve congrats for your predictions.

    Just because you surveyed predictive markets to inform (make) your picks, it doesn’t necessarily follow that you cheated. You shouldn’t be deprived of credit any more than if you had a stellar market-beating performance in your stock portfolio and later admitted that you simply followed a market guru’s recommendations.

    Mazel tov!

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  4. Rudy says:

    GENIUS, not! Please, this is ridiculous, everyone does that.

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  5. Matt says:

    Interesting, especially on how right the markets were. The comment I’d be interested to hear is what’s the reasoning when something that got no love goes on to win? According to HSX.com, the Best Adapted Screenplay should have gone to Up in the Air. Instead, it went to Precious, which the futures market had in fourth place. Is that because people are less passionate about Best Adapted Screenplay than they are about big awards like Best Picture? I.e., in order for “crowds” to have sway, you actually need a crowd? (The Hurt Locker was similar for the Best Original Screenplay, but went from 2nd on the futures to winning the award – not as big of a jump as Precious.) Thanks for the interesting report.

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  6. Brian says:

    Michael: Information markets designed to “discover” information, but rather to extract it from other people

    Discovering information is costly and valuable, but its value is amplified by cheap extraction methods–like information markets.

    Sometimes experts and insiders have the best information (the Oscars, stocks), but sometimes the aggregation of non-experts is more accurate (NCAA tournament predictions). Information markets are pretty good at extracting information in both cases, no small feat.

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  7. matunos says:

    I realize you use the term “expert” somewhat tongue-in-cheek here, but I think it’s a civil disservice to encourage people to “use the wisdom of the crowds” rather than educating themselves on the issues and forming their own insights. Oscar picks aren’t that important (unless you’re in the industry), but politics? Really? You’re suggesting that readers eschew political discourse and instead focus on the horserace (as if we didn’t get enough of that already), but not by relying on their own opinions, but the opinions of the anonymous prediction market crowds?

    To me, this seems like a recipe for civic disaster. Markets create feedback loops that can appear to be self-fulfilling… until they fail. We all know the results when a bubble pops on Wall Street. Rewind back to 2001. Which is the best performing financial company? Let’s ask James C. Collins!

    To a fat turkey, every day looks successful until Thanksgiving Day. I’d rather have a populace able to look at the calendar than rely on the echo chambers in the turkey yard that tell them the feed will flow forever.

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  8. Tonya says:

    “Listen to people twice as much as you speak”…I’m new in my company and spend much of my day listening to office chatter. Most of it is just gossip, but I am to learn quite a bit about people, policies, culture, etc. Aside from the gossip, I pick up a lot of useful information as well.

    The aggregate market may not always be correct, but chances are less that it will be incorrect.

    It’s possible to learn a lot from others. Of course then you have the problem of groupthink….and then we run into correlation versus causation. Thanks for getting me thinking! =)

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