Imagine someone said: The problem with paying people to make shoes is that then they get all focused on the money instead of the shoes. People who make shoes just because they honestly love making shoes, and who aren’t paid anything at all, make better shoes. Once money gets involved people lie about how good their shoes are, and about which shoes they like how much. But without money involved, everyone is nice and honest and efficient. That’s the problem with capitalism; money ruins everything.
They also failed badly on the NBA championship.
But seriously - I notice that events you would expect to strongly affect the market don't in the U.S. presidential race. Trump's odds stay the same regardless of what he does.
Reports are that prediction markets failed badly on the Brexit vote. If that's really true, it's worth investigating.
Bet incentives are at least roughly oriented toward speaking truth; the other incentives, not so much.
Those who have made intellectual contributions have generally not been individually motivated by the desire to speak truth. In reading Randall Collins's The Sociology of Philosophies, I'm struck that those who fail to be creative are inhibited by just this mistake about motivation. Or more exactly, the mistake about intellectual motivation rationalizes their intellectual inhibitions.
[I deal with this phenomena from a different angle in "Is epistemic equality a fiction?" - http://juridicalcoherence.b... ]
[Added.] The connection is explicit in "The distinct functions of belief and opinion" - http://tinyurl.com/4r9k5g3
Your schtick is playing Devil's Advocate as pedantically as possible, huh?
If you read Tetlock - or ever bet much yourself - you'd know that a gentlemen's bet where no money is on the line but the question is made concrete, and it's known we're gonna check back in the future to see whose right, improves accuracy dramatically.
The people in government who liked Tetlock's ideas are young studs.
The establishment didn't.
Honestly, all you Tyler sympathizers are building these elaborate theories for phenomenon that don't exist.
A winning or losing streak in most anything affects you psychologically. Poker players call it tilt.
Playing lots of poker makes you better at recognizing and adjusting for tilt - or it doesn't in which you case you lose and stop playing poker.
(By the way, if Cowen bet more then maybe he'd deal better with tilt, and avoid saying ridiculous things because he's butthurt about losing a bet.)
Would be good to generalize that kind of learning and selection - if you suck then get out - to as many fields as possible.
We know who the world's top poker players are.
Wouldn't it be nice to know same about, say, WAR.
Your pretty sad argument isn't all that sad. I agree that money results in the world having far more and better shoes, but it proceduralises the shoe industry (makes it mindnumingly boring for most of those in it) and introduces trickery.
Money has benefits and negatives, and you need to weigh up both in each situation. In the case of the shoe industry I agree money wins out for me and most people. But this doesn't necessarily mean money wins out for betting on ideas, health, education, or any other area. It's case by case. I'd say give it a go and find out.
It works about half the time.
Adam Smith noted that if more prestige is given to an occupation, then its pay tends to be lower.
In regard to lawyers, the situation is complex, because what lawyers do -- i.e., fight to get clients what they want -- isn't particularly respected. Lawyers who have high incomes and a lot of influence are respected, but low-ranking lawyers re not. (Whereas even a mediocre middle-school teacher will get respect out of proportion to their pay.) Jane Jacobs pointed out in "Systems of Survival" that what laywers do doesn't fit well within either of the two major ethical roles that our society defines, so their position is intrinsically disadvantaged for prestige.
In regard to teachers in the US, the situation is a mess. Teachers per se aren't paid particularly well relative to their education, but not too badly, either. But the public education system has a lot of administrators and other workers. Part of this is to deal with the complexity of the three levels of government that hand money out to schools, and partly because schools are used as the vehicle for what is really social services (that in other countries are part of other bureaucracies). E.g., in my metro area (Boston), the central city schools spend more per-pupil than any other school district, but there's no reason to believe that the spending on teaching delivered to a median student is better than in the wealthier suburban school districts.
Some scientific confirmation of Cowen's insights into the effects of winning a bet:
"Winning a competition predicts dishonest behavior" - http://www.pnas.org/content...
Very important point, and a surprising error for an economist: failing to look at he problem from a marginalist standpoint.
Note that Robin's justification for "leaning libertarian" is infirm for similar reasons.The only rational justification for "leaning libertarian" would be some claim that a social bias causes excessive statism.
As with "leaning libertarian," Robin evaluates betting with an argument that avoids a marginal analysis.
But the kind of bets economists tend to make are relatively small in scale to their overall earnings or worth and are probably more motivated by considerations of pride or smugness than by real financial concern.
If you made a substantial fraction of your money making bets it would be a different matter.
I think you are being unfair to Cowen here. Whether or not a particular way of offering compensation is a good one depends on the kind of result you want.
Suppose you own an international shoe selling company (like Nike) and hire 30 of the best shoe designers in the world to come work for you in your development lab. Initially you pay them all a flat salary and things went great then you start offering rewards to whoever submits the best idea and paying bonuses based on the fraction of company sales shoes you designed accounted for. One could easily imagine such a reward structure disincentivizing collaboration and reducing overall productivity.
I take Cowen's point to be that academic Economics is a very similar situation. One already has strong incentives to be good at one's job and come up with interesting ideas. Indeed, one even still has very strong incentives to be associated with influential predictions and theories.
However, one could well imagine that a norm of ready and easy betting would discourage suggesting off the wall or new ideas. Most new ideas are ill-formed and even if they eventually lead to a better model they often neglect important features at the start. If spitballing an idea might cause someone to say, "I think your full of shit. If you really believe that make a bet." it discourages voicing the idea since turning down the bet loses you status.
Worse, betting has an unfortunate biasing property as very few people bet with substantial fractions of their net worth. After all losing a bet where you back the status quo losses you little status (everyone thinks...well I thought the same way he just had the balls to bet) while losing a bet where you dispute it costs substantial status as it makes it seem like you were confident about your incorrect idea.
Maybe it's not true but you should at least admit the possibility that a norm of encouraging casual betting might disrupt the ability to generate new ideas and could enable the maintainers of the status quo to more easily suppress novel competitors.
Nobody has suggested that the two profs tried to renegotiate terms after the initial bet.
Maybe that would change in a prediction market, where changing one's position is facilitated, but I tend to doubt it. Intellectuals who bet are a distinct group in that they are trying to establish a track record on being right (not on estimating probabilities).
Maybe that itself would change. I would consider it unfortunate.