John Stossel: I was a fool
I was so dumb last week.
I wrote my column Tuesday — before election results were in. I assumed Hillary Clinton would be president-elect.
I looked so stupid.
On Facebook, commenters pounced: You owe Trump an apology! I’m sorry for the lies you continued about him! You were never fair! You’re nothing but another left-wing mouthpiece. You’re a washed up, anti-American gutless TV host!
I was wrong because I trusted the bettors.
That’s usually not dumb. The best predictor of things has been betting markets. They are more accurate because they reflect the wisdom of crowds. Crowds can be an ignorant mob, but crowds do have wisdom. Know the TV show “Who Wants To Be A Millionaire”?
When contestants are stumped, they may ask the audience for help or an expert. The experts are often brilliant specialists. The audience — well, they are the kind of people who wait in line in the rain to watch a game show. Still, the audience gets the answer right 91 percent of the time, the experts succeed just 65 percent of the time.
With betting markets, the crowd is made up of people willing to put their money where their mouths are. That makes them extra careful.
Most of these “prediction markets” are based overseas because, useful as they are, American law calls them “illegal gambling.”
So producer Maxim Lott and I converted European betting into an easy to understand website, Electionbettingodds.com, and I’ve come to trust it. Again and again, betting is more accurate than pundits and polls — until this election.
I’m not the only one who got it wrong. The Huffington Post’s statistical model gave Clinton a 98 percent chance of winning. The prestigious Princeton Election Consortium gave Clinton a 99 percent chance.
People just lie to pollsters when they think the pollster will sneer at them if they say they’re voting for someone smugly described as racist and sexist.
This was the second time this year that betting markets were wrong. Most bettors thought Brexit would never happen — people in Britain would vote to stay in the European Union. Again, British voters lied to pollsters because they were embarrassed to admit they would vote for Brexit after months of the elite telling them they were xenophobes and racists if they wanted a change.
Relying on the betting markets, I also wrote that it was sad that freedom-loving senators like Wisconsin’s Ron Johnson lost to command-and-control bureaucrats like Russ Feingold.
Oops, wrong again.
But the prediction markets are right most of the time.
Consider what happened early in this year’s Republican primary. Ben Carson surged to first place in polls, but the bettors knew better. They never gave him more than a 9 percent chance. In 2012, when Rick Perry, Newt Gingrich and then Herman Cain surged to first place in polls, prediction markets correctly said Mitt Romney will win. In 2008, bettors correctly predicted results in every state but two. In 2012, it was every state but one.
The markets even predicted when Saddam Hussein would be captured. Right before his hideout was found, the odds on that date tripled in price. Somehow, people with skin in the game pay more attention and intuit the right outcome.
Even last week, when bettors were wrong, the betting odds still adjusted faster than pundits on TV did. The bettors saw what was happening and quickly hedged their bets, while many in the media — mostly Clinton supporters — still clung to their failed expectations.
My failure won’t make me abandon prediction markets and go back to trusting pundits or opinion polls — or internet commenters who had fun trashing me:
“Dewey beats Truman … oh wait.”
“I can’t laugh enough at this article.”
“I liked Stossel … but he is as clueless as the liberal media.”
I sure was! But I will still trust prediction markets over everything else.
There is wisdom in crowds, especially crowds that put their own money on the line.
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