What went Wrong with Healthcare?

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12 Responses

  1. Howard Wasserman says:

    Maybe it’s a version of what Justice Ginsburg said a few weeks ago: Those who who are betting don’t know and those who know aren’t betting

  2. PrometheeFeu says:

    Here is an alternative: the markets weren’t wrong. Intrade correctly evaluated a 75% ex-ante probability of the mandate being struck down and this case turned out to be in the remaining 25%. The market wasn’t wrong, just unlucky. Prediction markets don’t actually predict the future, they just aggregate knowledge.

    Consider a prediction market on the roll of a die. The market would be correct to price itself at an 83% chance of the result not being a 6. That market does not become wrong just because the die comes up as a 6.

    Of course, this is unappealing and I think inaccurate. (thought the reasoning holds in general) I think a 75% probability was way too high. My guess is that participation in prediction markets is correlated with a certain preference for free-markets and libertarianism. Such people would be more likely to want to believe the mandate unconstitutional and be ready to pay money to demonstrate that fact.

  3. A.J. Sutter says:

    If we accept PrometheeFeu’s point, which I think is on the right track, then what may be misleading some people is to call it a “prediction market,” rather than a market estimating probability distributions. Moreover, even though it aggregates “knowledge,” it’s in a condition of extreme knowledge asymmetry, as Justice Ginsburg mentions. So it’s not particularly high-quality knowledge. Moreover bis, unlike a die, which can be rolled under more or less repeatable conditions, a ruling such as this is not repeatable. So from a frequentist point of view, what the “market” is coming up with isn’t even a probability distribution: it’s simply an opinion distribution, under conditions of extreme information asymmetry.

  4. Brett Bellmore says:

    Another point is, you might correctly estimate the odds in, say, a boxing match, based on past performance. You’re still going to get blindsided if the champ decides to take a dive.

    The prediction markets were right, it turns out: Roberts had the votes to win. He decided to lose, instead. He took a dive.

    Who can predict that sort of thing? Everybody thought it hinged on what Kennedy had for breakfast, not whether the Chief Justice would decide to twist himself into a pretzel finding an excuse to uphold a law he surely thought was unconstitutional.

  5. Joe says:

    Back in the 1790s, though I have no idea if Brett ever thinks the Constitution was actually correctly applied,* justices noted that they would only overturn federal laws when they were absolutely sure of their position. Roberts didn’t feel he met such a heightened test that factors in to how justices carry out the weighty activity of overturning federal law.

    * For those not aware, Brett has alluded to his belief that currently the courts simply don’t properly interpret the Constitution, at times suggesting some time (like the New Deal) was the turning point. Randy Barnett et. al. also think the ND was a nadir. Not seeing the days beforehand as ideal, I find this sentiment dubious.

  6. Actually Josh Blackman’s platform had it about right – lots of uncertainty gets you the ~54% to ~46% split that was present before the decision.

    A useful question to be asking here is why the compositional differences in the respective crowds (Intrade v. FantasySCOTUS) generated the spread between {27%=Affirm Intrade} vs. {46%=Affirm FantasySCOTUS} … and turn how that might be leveraged to generate a better prediction engine.

    Best,
    Dan

  7. Shag from Brookline says:

    Brett should be aware that the decision making process at SCOTUS is not as simple as ordering a mail-order-bride. Brett accuses CJ Roberts of taking a dive. But he fails to accept that Justices Scalia, Thomas and Alito have long been in the tank for conservative causes. No, CJ Roberts, did not take a dive, he merely refused to Join the Etna cesspool. And Justice Kennedy apparently doesn’t like competition in swinging. Yes, Brett continues with his chronic case of “Wick-burn,” for which there is no soothing balm.

  8. Miriam A. Cherry says:

    Thanks, everyone for some interesting thoughts/comments. Yes, the Josh Blackmun / Fantasy SCOTUS market was more correct. He seemed to think that it was because of the way that the questions were phrased on that market versus the way that Intrade phrased it. Very interesting!

  9. Another possibility would be that prediction markets do not do particularly well with decisions that are left up to one person. After all, there is such a thing as free will.

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  11. Metler Law says:

    “the crowd is basically all equally uninformed” – great quote. I feel this way about the majority of politics today.

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