Try Your Hand at Economic Forecasting

Think you can do a better job at predicting the economic future than all those economists and pundits?  Here's your chance to prove it:

Members of the public are being encouraged to take on the Bank of England by betting on the U.K.'s future inflation and unemployment rates.

Free-market think tank the Adam Smith Institute on Wednesday launched two betting markets in an attempt to use the "wisdom of crowds" to beat the Bank of England's official forecasters. Punters can place bets on what the rate of both U.K. inflation and unemployment will be on June 1, 2015.

Sam Bowman, the research director of the Adam Smith Institute, believes the new markets will "out-predict" official Bank of England predictions.  "If these markets catch on, the government should consider outsourcing all of its forecasts to prediction markets instead of expert forecasters," he said.

Adventures in Ideas: Crowd Control — an Interview With Shaun Abrahamson

I recently read an engaging book on the use of crowds and crowd-based intelligence for generating innovation. Shaun Abrahamson is one of the authors of Crowdstorm: The Future of Innovation, Ideas, and Problem Solving.

I have to admit that I am not a big believer in leveraging crowds for change—I think there is a fetish of the role that masses play in idea formation. I do believe that intelligence is distributed, but I’m an old-fashioned proponent of formal organizations.

But after reading Shaun’s book, I changed some of my stubborn views. The book is a systematic (and critical) appraisal of the role that crowds can play in diverse organizational and personal settings. I think Freakonomics readers might benefit from hearing Shaun’s insights.

Q. Aristotle said that every new idea builds on something earlier by hiding/transforming it. What's old and what's "new" in crowdstorming? 

A. The main newness is the identification of patterns for finding and evaluating ideas. More specifically the identification of patterns that seem to deliver good or better results than if we were to working with smaller groups of people. 

Crowdsourcing Economics

An interesting approach to economics, from UC Berkeley economists William FuchsBrett Green, and David Levine: crowdfunding.

But first, some background, because this is fascinating stuff. The typical household in rural Africa is "off the grid." With no electricity, such households spend a significant fraction of their income on kerosene for lamps. Yet for about $20, they can buy a solar light, which provides a superior source of light and charges their cell phones. (Yes, cell phone use is common, even in rural households with no electricity; they simply walk to the nearest town and pay to charge their phones.)  Given that the light pays for itself in about 6 weeks and lasts for about 3 years, purchasing one seems like a no-brainer. Yet few households have done so.  These intrepid economists are trying to figure out why, and want to see whether the barriers to adoption can be overcome in a profitable way. In order to do so, they are running controlled experiments in rural Ugandan villages using various combinations of incentives and financing arrangements.