BRYAN CAPLAN
May 7, 2013
Keynesian Bets: What's Out There
May 6, 2013
Keynesian Bets Bleg
May 6, 2013
The Pyramid of Macroeconomic Insight and Virtue
May 2, 2013
A Natalist Provision
May 1, 2013
I Was a Teenage Misanthrope
DAVID HENDERSON
May 5, 2013
John Thacker on Vaccinations and the Sequester
May 3, 2013
Chef Rudy's Virtues Project
May 2, 2013
My take on Reinhart and Rogoff
May 1, 2013
Medicare Kills a Program
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Yes, but you had the prescience of Rick Santelli to guide
you :-)!!
Congrats, Bryan, and a hearty thanks to Mish for being willing to bet on his beliefs. Bets like this marginally improve academia.
Tim Kane should get to intrade immediately where he can get better than evens.
Isn't his e-mail address right there on his blog under "Contact Me"?
Are you going to buy Intrade shares in Romney (at ~$3.4) to create a no-risk portfolio?
(If not, shouldn't you turn in your economist ID card at the door?)
Official statistics are not worth warm spit. And pre-election official statistics are worth even less than usual.
Would you buy Obama at $6.50?
Are you going to hedge the bet? It seems unsporting but natural.
If not, on what grounds are you going to not hedge?
Some victory. Take a very volatile number that is produced by a department that has a clear bias to support the existing administration and you can come up with any claim. The trouble is that the claim may turn out to be just as wrong as the two candidates are.
Vangel: I'm no fan of the current administration, but it's just not factually plausible that the administration rigged the numbers.
The numbers are incredibly closely guarded and based on a predetermined, fixed and well-defined study design and statistical methodology. They don't have the option to adjust it upward or downward based on their preferences or bias. (See here for more).
Shouldn't you wait until the inevitable couple of months of "corrections" to the numbers before officially settling your employment numbers bet?
For the Obama/Romney bet, you can get odds of 6-1 in England, where they're very convinced Obama will win. I suggest finding someone you know there to place a bet for you if you want to bet on Romney.
I'm trying to find someone local to give me the same odds (I personally think Romney will win, maybe even win big).
Navin,
Basic finance theory would suggest Bryan shouldn't hedge the Romney bet. There are always some transactions costs. For example, intrade has a bid asked spread and I'm not sure if they have other fees as well.
For a small gamble relative to Bryan's net worth, he shouldn't hedge as long as there are some transactions costs.
Its like if you are gambling and have a free bet on black. You can put more money down on red and green to eliminate your variance, but your EV goes down because the house takes a cut.
The lesson in this for Mish is you should never bet against the Federal government's willingness to cook the books. You especially should not pick the exact target that the government has said it will meet. Where there is a way, there is a will.