Look to prediction markets for better political insight, says Wolfers in NYT Upshot
In his most recent column for the New York Times’ Upshot, Justin Wolfers explains how and why political prediction markets may provide more unbiased assessments of presidential debate performances this fall than pundits. Wolfers writes about two shifts in prediction markets on Monday that helped to score each candidate’s performance.
According to Wolfers, movements in political prediction markets provide a useful signal of “which candidate most exceeded expectations.” Prediction markets continuously incorporate each candidate’s strengths and weaknesses when setting prices and odds. As a result, changes in price reveal shifting expectations.
Wolfers cautions that markets do occasionally overreact, but concludes that Monday's markets demonstrated that “Mrs. Clinton did more” to help her candidacy in the first debate.
This column follows an earlier piece by Wolfers on expectations for Monday’s debate.
Justin Wolfers is a professor of public policy at the Ford School and a professor of economics in the department of economics. Wolfers' research interests include labor economics, macroeconomics, political economy, economics of the family, social policy, law and economics, and behavioral economics.