Bryan Caplan  

What's Libertarian About Betting?

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I'm a libertarian and a betting man.  Is there any connection between the two?

The facile answer is that "Reality has a well-known libertarian bias."  On some level, I believe this.  But it's a subtle, long-run bias.  Confidently betting on libertarian stereotypes hardly strikes me as a viable get-rich-quick scheme.

The sound answer is far more complex.  It begins with a simple observation: Advocates of government action typically make extreme claims.  They make extreme claims about how awful things will be if government does nothing.  And they make extreme claims about how much better things will be if government heeds them.

Disagree?  Imagine a hawk advocating an invasion of Libya.  He could say, "Invading reduces the risk of disaster from 54% to 52%, so it passes a cost-benefit test."  But I've never heard a hawk make such an argument.  A typical defense is rather, "We can stand here, do nothing, and let Libya collapse into bloody chaos.  Or we can take a stand and set things right once and for all."

Or imagine a proponent of the minimum wage conceding, "There's a 30% chance that the minimum wage actually hurts the poor by increasing unemployment.  But there's a 70% chance that wage gains outweigh the disemployment effects, so we should totally throw the dice."  That's not how friends of the minimum wage talk.  Instead, they'll declare something like, "Every hard-working Americans deserves to earn a decent wage, and the minimum wage ensure that every hard-working American gets the decent wage he deserves."

Why are proponents of government action so prone to hyperbole?  Because it's rhetorically effective, of course.  You need wild claims and flowery words to whip up public enthusiasm for government action.  Sober weighing of probability, cost, and benefit damns with faint praise - and fails to overcome public apathy.

Now suppose my Betting Norm were universally accepted.  Any public figure who refuses to bet large sums on his literal statements is an instant laughingstock, a figure of fun.  What happens?  Political hyperbole ends for politicians and pundits alike.  Hysterical doom-saying and promises of utopia vanish from public discourse.  No one serious can afford them!  As a result, it becomes very rhetorically difficult to make the case for government to do anything - or at least anything new.  Without an inspiring case for government action, government sits still.

Utilitarians will swiftly protest, "As long as expected benefits exceed expected costs, government should act."  They may even add, "Nothing's more inspiring than passing each and every law with expected net benefits."  But this misses the point.  Most people aren't utilitarians.  They're not even close.  Honest, modest utilitarian arguments leave psychologically normal humans unmoved.  And without popular support, democracy lies dormant.  "Why bother?" kills "Yes we can!"

So what's libertarian about betting?  It stifles hyperbole, the fuel of Big Government.  Machiavellian non-libertarians will naturally conclude that honesty is overrated.  But this too is a bitter pill.  A few can cope with the admission that the policies they love rest on errors and thrive on lies.  But everyone else will at least wonder if they should give liberty a chance.




COMMENTS (15 to date)
wd40 writes:

Hyperbole exists on both sides. It is not the sole domain of either the left or the right. Will a reduction in government spending bring about all the rewards that the libertarian claims or bring about all the harms that the left-leaning Democrat claims. Will school vouchers yield miracles claimed by their proponents or disasters claimed by their opponents. Economists should always be aware of potential symmetries. Betting is a good way to get people to deal with reality.

Peter H writes:

I think it is a bit more than that. Many if not most people find the idea of betting money on statements like that gauche.

I am reminded of when Nate Silver got into a public argument with Joe Scarborough about the odds of Obama winning, which Silver was putting ~75%, when Scarborough was saying it was 50/50. Silver faced significant criticism, including from his then-bosses at The New York Times for doing so.

It makes sense to see that sort of criticism from the people who oppose you, but this came as well from people who would probably take Silver's side on the debate.

http://publiceditor.blogs.nytimes.com/2012/11/01/under-attack-nate-silver-picks-the-wrong-defense/?_r=0

Silver I think was totally in the right, but the overall culture is so opposed to betting right now that he faced significant criticism for offering the bet.

Similarly, in the 2012 primaries, Mitt Romney took a lot of flak when he tried to make a $10,000 bet with Rick Perry live during a debate. Though Romney's mistake was in part offering such a large bet on the spur of the moment, which accentuated how rich he was in a negative light.

Nathan W writes:

I read dozens of times a day from Canadian Conservatives who appear convinced that the country will enter into an almost immediate period of decline and then ruin if either the NDP or Liberals are elected.

Yet, the differences in the party platforms with respect to taxing and spending amount to less than half a percentage point of GDP.

Bedarz Iliaci writes:

Events in economical sphere tend to be quantifiable but events in political sphere less so. Could one really measure changes in the quality of life and subjective preferences for living in a homogeneous community?

That is why, use of betting as a rhetorical strategy is unlikely to find favor even among the common people. One must not attempt to quantify that can not be quantify. It is bad procedure.

john hare writes:

This post boils down to "politicians should have skin in any game they advocate" with betting as the specific mechanism. The point is valid even if the specific mechanism is flawed.

Even worse is the method Bryan frequently proposes, which is letting an opponent hold the money for extended periods of time. It would be somewhat better to suggest that both parties put the money in an investment that matures at the prediction time such that the money is at least working during the duration of the bet. Money is a tool and the value of a tool is in the work that can be done with it. I don't put hammers in an inaccessible vault in an unfriendly bank, I put them in my toolbox.

ThomasH writes:

As a sober utilitarian I have felt the same frustration trying without success to get Conservatives to place bets on how (or even to define how) President Obama's stimulus package was going to destroy the economy or ACA would harm health insurance financing. Or QE would to lead to hyper inflation. Or the reduction in the number of aliens voting as a result of voter suppression laws. The time scales are too long to make betting practical but the same goes for bets about indicators of climate change.

If I knew a bit more of the details and how to define the ceteris paribus conditions, I'd be prepared to wager on the ratio of income gained by those who do not lose jobs after a given minimum wage increase to the income lost by those who
lose/do not get jobs.

And I don't know how to set up the wager, but I'll bet more "good stuff" does not get done because of exaggerated fears that gets done because of exaggerated claims.

I suspect everyone (maybe not Bryan) automatically discounts exaggerated claims made by those on "their side" and wants to hold the "other side" strictly accountable for their claims.

But win or lose I'd prefer to live in a Caplan-esque polity in which wild claims had disappeared.

MG writes:

It will help constraint policy (intervention or not) decision-making, but it will not curtail it. It may be a good tool for disciplining the more intellectually honest across the policy spectrum, but not most.

Why? The Libertarian position is usually akin to a market neutral position, whereas Right and Left positions are akin to going long/short. Betting may highlight that long/short bets are being made under inflated probability of success expectations. However, all this would do is make Right/Left policy claim exaggerated utilities for success or failure with all kinds of fat tails. If that fails, they will segment the win/loss share so that net losses are societal wins if they accrue to those who "deserve" them or "need" them more.

Adam Casey writes:

Hate to rain on the parade. But I don't think this difference holds up.

Everyone thinks that people who disagree with them make wild and unsupportable claims. The capitalist thinks that communists are totally unreasonable to think wage labour is similar to genocide. The communist thinks the capitalists are totally unreasonable to claim that dividing wealth equally would result in millions of deaths. Everyone feels like that.

I don't personally observe that libertarians are immune to hyperbole. "Taxes taken at the point of a gun" as a case in point.

To explain why (if it's in fact even true) libertarians bet more you'd have to point out something that's actually different. My guess is that the best place to look is sacred values.

I don't think libertarians hold the same things sacred that everyone else does, hence letting them bet on things when others can see it's a violation of a sacred value to do so.

Mark S writes:

@Adam Casey

"Taxes taken at the point of a gun" is descriptively referring to state power (whether apt or inappropriate) and is not making a prediction. The predictive form is: if you don't pay your taxes then somebody with a gun will request you do or lock you away with a threat of escalating force should you not comply.

Also Bryan isn't claiming that libertarians bet more nor is he claiming that libertarians make fewer hyperbolic predictions. All he is claiming is that people on the right and the left make hyperbolic predictions and these are used to fuel the rhetoric supporting large non-libertarian government. The argument is that getting everybody to adopt the betting norm will lead to more humble claims which will move us towards libertarianism. The beliefs of other libertarians are irrelevant for this claim.

I don't think Bryan has proven this claim, but it is an interesting and plausible one.

_NL writes:

I think betting is becoming a little more common. I made a qualified comment regarding Muslim immigration to Europe. Somebody asked me to bet on it, which is weird because I put like 3 qualifiers in, no clear timetable, and no obvious metric. I think he offered to bet because I used the rhetorical "I'll bet" which sounds like an offer to wager but is also used to mean "in my opinion."

At first I thought it was weird he took it as an opportunity to wager with a stranger on the Internet and it was clear I meant it rhetorically. But then I figured betting would be fine, since I had made just a thoroughly qualified and unremarkable statement that it'd be almost impossible to lose. He lost interest in betting when I asked him to clarify that he thought the current Muslim immigrants wouldn't clear the hurdle of the previous Muslim immigrants.

John Hawkins writes:

This reminded me so much of this Orwell piece Politics and the English Language.

https://www.mtholyoke.edu/acad/intrel/orwell46.htm

Betting is about forcing people to speak clearly and not misuse/abuse language for their aims.

Thomas Sewell writes:

To follow up with what Mark S. said to Adam Casey, I'd be willing (and so would most others, likely even non-libertarians) to place a bet at significant odds about the prediction:
If you don't pay your taxes then somebody with a gun will request you do, seize your property against your will and/or lock you away with a threat of escalating force should you continue to not comply.

If you aren't willing to take the opposing side of that prediction, then you're conceding that yes, taxes are literally taken at the point of a gun. That's one difference between hyperbole and a statement fact. If you don't really believe taxes are collected based on force, then I'd challenge you to support making all taxes strictly voluntary so we can see how many people will pay them anyway....

Adam Casey writes:

I pick "taxes at the point of a gun" as an example of hyperbolic rhetoric rather than predictions per se. For hyperbolic predictions consider predictions made by excitable libertarians about the use of new legislation to arrest (white, middle class) people who dissent against the government. Often predicted, doesn't usually happen in practice.

As for the taxes thing I still don't actually think it's an accurate description. Many people I know don't pay all or part of their tax bill. Sometimes such people get caught but often enough it's not worth the government's effort. Nobody I know has ever had a gun pointed at them by a policeman (note, I'm in the UK, this is normal).

And whilst I appreciate the rhetorical effect at no point in the process of catching tax evaders and confiscating their property electronically is it required to point actual literal guns at people. Consider the UK. I would be astonished if as many as 10 tax evaders had had an actual physical gun pointed at their body in the last decade regardless how much they resisted. It's symbolically true. It's not literally true in any reasonable scenario.

Ted writes:

Mr. Casey, I agree with your assertions about hyperbole, generally speaking, but must respectfully disagree with your "taxes at the point of a gun" as an example thereof.

Behind every law is a person with a club and a gun to enforce it. Whether or not any single individual will experience such escalations of force when they stand in defiance of enforcement is subject to demographic selectivity, but the relative immunities of the privileged and overlooked do not change the dynamic.

As an American, the firearm metaphor is relevant and immanent. I can appreciate that British citizens may be excluded from facing firearms in the preliminary stages of escalation, but the dynamic is real and commonplace.

Dranorter writes:

If betting norms spread, they will not prevent moving rhetoric. They will prevent specific types of rhetoric. I think the wording in the case of Libya is the best example. "We can stand by and watch it fall apart, or we can act now and fix things!" Suppose this claim is challenged with an offer of a bet. The person who made the claim is really just listing possibilities, and not claiming near-certainty on either point. Rhetorically, they don't need to defend themselves as being certain - they can rwly on the emotional response to imagining the possibility of things going wring if we don't help, and of things going well if well do. If asked for a more concrete prediction, they can respond "As things stand right now, people are dying. I'm certain we can make a difference by taking action." The person trying to propose a bet has the rhetorical disadvantage of needing to get nitpicky if they want to disagree.

In other words it's not hard to stick strictly to claims with high probability. A politician would also not have a hard time dodging claims altogether, or sticking to claims which would be impossible to measure ("There will be more jobs if we pass this law than if we don't" isn't measurable.)

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