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I hope this title doesn’t get the blog blacklisted. I assure you it is perfectly "SFW"!
I’m using "information porn" in a certain way based on an entertaining and informative Bloomberg article about investment firm Dimensional Fund Advisors. The article discusses DFA’s warnings about "investment porn", by which they mean articles that tout some new company or investment as the next big thing. DFA are followers of the Efficient Market Hypothesis, and one of their directors is economist Eugene Fama, a pioneer of the EMH. DFA were among the first fund families to create index funds and promote "passive investing", a sharp departure from traditional active investing, where fund managers try to cleverly pick stocks and other investments that have exceptional value. DFA is almost fanatical about their philosophy and really puts investment advisors through the wringer before allowing them to sell DFA funds. I suppose this can be seen as an example of the EMH applied to marketing; if you have a high value product, the market will figure it out and so you can afford to be picky about your customers. That seems to be their philosophy, anyway, and they’ve been quite successful at it.
Investment porn is therefore material which is exciting and makes you think you’re getting inside information, an inside track and a chance to do well in the markets ahead of everyone else. But it’s basically public information, so you’re deluding yourself if you think this kind of data is really going to give you an advantage.
I’m generalizing this to information porn, which can play a similar misleading role in more general areas of controversy where you are trying to come up with an unbiased view of the truth. Information porn in this sense is data which will supposedly lead you to the truth, often by promoting or arguing for a certain position. But as with the investment porn case, the data is fundamentally public and available to everyone. Once again, you are fooling yourself if you think that relying on this data is going to give you an advantage over the consensus opinion, because that opinion will already have taken this data into account.
This obviously ties into the Majoritarian view, and I want to thank commenter ChrisA for pointing out the connection between Philosophical Majoritarianism and the EMH. From this perspective, arguments and data which support a controversial position are much like pornography, and should be viewed with similar skepticism. (Or consumed with similar eagerness, depending on taste.)
Beware of Information Porn
Strange coincidence: I wrote the previous comment yesterday and then I opened a book I had received in the mail earlier that day, and it happens to discuss exactly the issue I raised: polls and averaging versus prediction markets. The book is The Difference, by Scott E. Page, and in chapter 8 he goes into when and why prediction markets would be expected to do better than simple averaging. The results were quite surprising to me, and I need to try harder to understand them. I hope to post a summary soon.
I am curious about studies that compare betting markets to other forms of information aggregation, in particular straightforward polling and averaging. I have been hunting through Gallup poll results and other places to try to find data about public predictions that could be compared with existing markets, either financial markets or prediction markets. So far I haven't found any good examples. Gallup does not very often ask people to make predictions; they more often ask how people think and feel about issues. They ask who are you going to vote for rather than who do you think will win the election.
I did find some time series of predictions about whether the economy is going to get better or worse, but I can't think of a futures market to compare that to.
Betting markets have the property that people who have stronger opinions and/or more money play a larger role. The question is how well correlated this is to correctness. Betting markets also encourage honesty, but for many issues an anonymous poll won't give people much incentive to lie. Betting markets reward discovery of new information, which polls do not, but it's not clear that that will by itself cause more accurate forecasts. Overall it is not clear to me how much better in practice a betting market will be than a simple poll.