Bryan Caplan  

Puzzled by Brad's Puzzlement

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And Bring on the Mexicans... Tenure and Non-Profits...

Brad DeLong is deeply puzzled by a sensible observation over at Free Exchange:

The Economist's Free Exchange:

Trailing the truth | Free exchange | Economist.com: [P]undits are almost never punished for being wildly wrong about something. Nor are they rewarded for being right about something—along with 7,000 other pundits. For journalists, a prediction pays off only if it is both right, and unusual. This gives them an incentive to take unnecessary risks, making somewhat outlandish predictions on the off chance that they will be right. Those pundits who "got Iraq right" or "predicted the tech bubble collapse" are feted with speaking engagements and special television appearances, while those who made sensible-but-dull arguments labour in obscurity...

So to argue in 1998, 1999, and 2000 that the NASDAQ would continue rising was a "sensible-but-dull argument"? So to argue in 2003 that a grossly undermanned occupation of Iraq would go smoothly was a "sensible-but-dull" argument? There is something very wrong here.


I think Free Exchange's view is that the NASDAQ and Iraq invasion enthusiasts were wrong but usual. The reputational punishment was, accordingly, minimal. The nay-sayers, in contrast, won kudos because their view was right but unusual.

Counter-factually, if the nay-sayers had been an overwhelming majority, their view would have fallen under the heading of right but usual, and their kudos would have been minimal.

And just to complete our tour of logical space, if a view is wrong and unusual, its proponents risk being written off as quacks - though if you're lucky people just forget.

Bottom line: If you take a usual view, you're safe whether you're right or wrong. If you take an unusual view, there's a big upside if you're right, and a moderate downside if you're wrong.

I don't know whether the Free Exchange position is right but usual, or right but unusual, but I'm pretty sure it's right.


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COMMENTS (9 to date)
Patrik writes:

Having read a piece over at Passport( http://blog.foreignpolicy.com/node/3394), I am not so sure about your statement that those who took a position against the Iraq War have won any kudos.

Sure, those who were wrong have not been "punished" since they were so plenty but for your logic to hold there should be a reward for being right, something I have seen very few signs of.

Steve Sailer writes:

The Economist claims:

"Those pundits who "got Iraq right" or "predicted the tech bubble collapse" are feted with speaking engagements and special television appearances, while those who made sensible-but-dull arguments labour in obscurity."

So _that's_ why Tom Friedman and Charles Krauthammer were fired by the New York Times and the Washington Post, respectively, and the War Nerd and Greg Cochran hired in their place!

Paul Zrimsek writes:

Is Brad "We don't have enough troops to take Baghdad!" DeLong actually complaining about this? If my head exploded as readily as his does they'd be hosing out my cubicle right now.

Matt writes:

So who will be the first opportunistic journalist or pundit to say that global warming is a hoax?

All the pundits saying it right now are "sensible-but-dull".

John Thacker writes:

but for your logic to hold there should be a reward for being right, something I have seen very few signs of.

Well, I suspect that it did play a role in the recent elections. Though at the same time very few of the initial skeptics professed reasons for skepticism have held true, either. Should people who opposed the war because they felt that there would be huge military losses in the initial invasion, or WMD attacks on soldiers and neighboring countries be rewarded, for example?

Pretinieks writes:

Matt asked:

So who will be the first opportunistic journalist or pundit to say that global warming is a hoax?

Somewhat ironically, this documentary was aired some 13+x hours earlier :)

of course, it's nowhere near being the first one questioning "global warming" but it's the first time I see such a strong word in headlines.

(for me, 'swindle' seems even a bit stronger that 'hoax')

Bill Conerly writes:

Optimal strategy: two pundits secretly pair up. One takes the optimistic extreme, the other the pessimistic extreme. Neither makes money as things go along the middle of the road. When an unusual event occurs, one scores big, and secretly makes a side payment to the other pundit. Both fare better than if they were making middle of the road forecasts.

I wonder who the secret pairs are. Roubini and Malpass? Krugman and Wesbury? Wouldn't it be fun to start a totally baseless rumor?

(-_-) writes:

Its supply and demand...there is always a bigger payoff to bigger risk, simply because there are so many people who have common predictions, and so few (relatively) that have outlandish successful ones. I know I am stating the obvious but hey, what is wrong with that?

Along somewhat the same line as Paul Zrimsek, maybe if DeLong didn't isolate himself from contradictory viewpoints (i.e. deleting them from his blog's comments) he might not be surprised, puzzled, outraged, so often.

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