I think there are wider problems that extend to non-money based systems: as soon as people start making decisions based on prediction markets, people will start deliberately distorting them to achieve desired goals. Like if you want AI safety funding to increase, why not deliberately put an overoptimistic forecast on AGI arriving on metacalculus? The question is weighted the same as way easier ones when it comes to your forecasting questions, so it won't even affect your top forecaster rating by much.
Yes, though these can be mitigated somewhat by more sophisticated scoring systems. The simplest example is if you also measure how "controversial" your prediction is, e.g. if people largely predicted something wouldn't happen, while you successfully predicted it would, you'd get more points (some platforms already do a version of this). This can be extended with a tagging system that records in which *domains* you have a good track record. This would prevent people from building up a "good track record" by e.g. successfully predicting every day that the sun will rise.
Although we might still expect some group bias here, so perhaps we also need something akin to the "birdsong" algorithm.
What I'm not arguing for is "futarchy" (that governments solely rely on prediction markets/prediction platforms), I envision the future more pluralistic, using a combination of; academic surveys, prediction platforms, hired researchers etc etc. They will all have their biases but by taking those into account and comparing them they will collectively be less biased.
In any case, prediction platforms will be better than prediction markets since there's less chance people will spread misinformation, act on harmful incentives, or gamble away their life savings.
Yeah, I'd be happy with a system where prediction platforms are used as an additional tool among many to evaluate claims, as long as they aren't used as a replacement for those other methods.
Part of doing this sucessfuly would be a clear-headed understanding of their limitations, so I'm glad you wrote this up!
I worked for Metaculus briefly and disastrously. They were quite obsessed with this idea of allocating decisions and funding based on Metaculus questions and simply would not understand the obvious point you are making here. I think it ultimately stemmed from Anthony lacking time to devote to "his" project while being extremely badly ignorant of how to properly hand it off to someone. So we ended up in a situation where the out-of-touch founder would have these ideas he was so sure about, and all the crazy then-CEO cared about was placating the founder and similar outside stakeholders so there was no clear process for reversing these stupid decisions.
I have to tell you that prior to working at Metaculus, I was non-EA but for the most part favorably disposed to them, or to who I thought they were. After seeing what it was actually like, I have come around to the conviction that the EA community is a massive disgrace and all of their supposed beliefs are hypocritical half-beliefs in the manner of a religion. When you give money to an EA organization it is likely to go to sending people to fake conferences, or hiring their buddy's project for services they would never otherwise have hired, and so on. The whole thing is functionally just a competition for places, most of which will never be obtained, pretending to be some kind of philosophical social movement. This is actually pretty obvious as soon as you get any kind of serious handle on these places, and the only reason EAs don't know it is that to be an EA is almost definitionally to be an inexperienced and impractical kid.
"hiring their buddy's project for services they would never otherwise have hired" is a direct reference btw to how Metaculus paid money to Verity, a worse version of Ground News, for useless services. Verity is the project of Max Tegmark, who is Anthony's longtime friend. Now that the Future of Life Institute has all that meme coin money, Tegmark has been able to hire his wife to supposedly run it. It's likely legal but it's all so blatantly and disgustingly corrupt.
Though I will say that the "global development" and to a lesser extend the "animal welfare" charities that EAs promote are still pretty good. It is, in my opinion, mostly the "meta-EA" and "longtermism" charities that people should be wary of.
Right, GiveWell was always my model of what EA was before I knew what EA really was, and back when I liked EA. In my view it's basically an indulgence-buying project to try and rub off some perceived virtue on the weirdos who want to fill the lightcone with shrimp or whatever it is that they're doing.
Fascinating post. I didn't know how often outcomes are influenced deliberately to profit from these markets. Still, it seems like these problems are solvable. Betting markets themselves would profit from banning people from participating if they can directly influence the outcome, or at least forcing those people to make all of their trades without anonymity.
Betting platforms (and let’s not give unearned valor to these by calling them prediction markets) are an u equivocally bad idea.
They have caused immense harm and no societal gain in the sports betting sector, and will cause even more harm in the political sector.
You rightly point out issues with addiction and perverse incentives, yet you barely mention the mammoth risk of malign agents.
The Russians, Saudis, and high-wealth individuals would find it a trivial task to wildly affect the market. If Trump is trailing, a series of bets involving a trivial amount of money could dramatically pervert prediction.
This could be stopped by creating finite pools, but that would be easily hacked as well.
The entire exercise of these markets, while perhaps academic in the past, is profit and speculation, and the potential harm is immense. There should be no conversation about promoting or legalizing.
Prediction markets or speculative markets are useful in any economy with a sound basis. These markets act as signaling when the requirements are properly are met. The difficulty is that the requirements haven't been met for quite a long time now, and they haven't been met because of various forms of money-printing, or betting on leverage which indirectly ties to money-printing (in its infinitely conceivable forms).
When you can bet more than you have, you utilize the full distorting power of money-printing when that bet goes bad. Someone has to pay it, if its not the person making the bet, its everyone holding the currency, and this is what most people misunderstand. The problems we see today aren't problems in small niche areas, they are chasms that have been carved out underneath everyone's feet for decades with most unaware of the danger, seeing small crevasse here and there as merely the small ups and downs of nature.
I'm sorry, I don't see the link between acting on market incentives and money printing. Are you saying that what e.g. Jontay Porter did is a kind of money printing?
The issue is a bit more fundamental, and I was speaking more to general speculative markets and what's required for them to provide benefit.
For markets to function correctly, you need three things: independent adversarial decision-making, price discovery, and a relatively constant value constraint, all other things being equal.
The fiat monetary system we find ourselves in today has degraded the markets, and money-printing happens regularly in ways that both lag and are not immediately visible.
Money-printing creates distortions where the parties involved cooperate even when they don't know they are doing so, and it results in fundamentally chaotic whipsaws creating distortions as the money goes through the economy.
For example, frequent flyer miles are one form of money-printing, the airlines sell those flier miles which they print from thin air to Credit Card companies, who use money they get from their underwriters, which gets printed from a bank without reserve requirements (that eventually gets trued up during or immediately after a cyclical 8-10 year banking crisis).
What you may not be aware of is that in 2020, the Fed and most central banks around the world abandoned fractional reserve banking silently, and transitioned to a capital requirements systems which is fundamentally based in objective valuation (Basel 3). If you go to the Fed website, you'll see deposit requirements are set to 0%; which confirms this. Valuation has been proven to be based in subjective value, and so that system is a very poor choice.
This money-printing goes for paper warrants in the Commodity markets (which have had quite a lot of speculation), where paper:physical has a ratio of over 300+:1 oversubscription and as long as its within the COMEX vaults, any physical is paper and vice versa.
Wall street have also used PFOF and Options Contracts with a privileged market position as a market-maker to do the same thing with regards to synthetic shares which are treated as real shares that don't actually exist, but the financial systems have no way to remove such shares or track them. This has allowed the major players to consolidate all transactions into Dark Pools which don't impact the listed price, and over half of all transactions occur now in these Dark Pools (no price discovery).
In your example of Jontay Porter, he cooperated with an entity to print himself some money for profit, though at the individual level this is arguably constrained unless their is a tie leading back to a bank. Its distorting power is limited in that respect because not all will be collectible downstream; but yes it is a form of money-printing when offering non-reserve credit.
I was speaking more broadly, since these issues start at the source of money. The issues simply snowballs as it travels downhill, and the chaos grows mathematically which are common behaviors in historic money-printing environments.
In many respects markets, and by extension economies are like n-body limited visibility astrophysics problems. When there are only two interacting bodies (a buyer a seller) its stable, but the moment a third comes into play that dramatically impacts the two towards cooperation, it becomes mathematically chaotic where small inputs create massive changes in outcome given sufficient time in those systems.
Most outcomes in such modeled systems end in collapse to a single body, or expulsion from the system. Similar dynamics occur at the micro and macro levels, and if those outcomes came to pass there would be societal issues over food production if Catton is correct.
Great post!
I think there are wider problems that extend to non-money based systems: as soon as people start making decisions based on prediction markets, people will start deliberately distorting them to achieve desired goals. Like if you want AI safety funding to increase, why not deliberately put an overoptimistic forecast on AGI arriving on metacalculus? The question is weighted the same as way easier ones when it comes to your forecasting questions, so it won't even affect your top forecaster rating by much.
Yes, though these can be mitigated somewhat by more sophisticated scoring systems. The simplest example is if you also measure how "controversial" your prediction is, e.g. if people largely predicted something wouldn't happen, while you successfully predicted it would, you'd get more points (some platforms already do a version of this). This can be extended with a tagging system that records in which *domains* you have a good track record. This would prevent people from building up a "good track record" by e.g. successfully predicting every day that the sun will rise.
Although we might still expect some group bias here, so perhaps we also need something akin to the "birdsong" algorithm.
What I'm not arguing for is "futarchy" (that governments solely rely on prediction markets/prediction platforms), I envision the future more pluralistic, using a combination of; academic surveys, prediction platforms, hired researchers etc etc. They will all have their biases but by taking those into account and comparing them they will collectively be less biased.
In any case, prediction platforms will be better than prediction markets since there's less chance people will spread misinformation, act on harmful incentives, or gamble away their life savings.
Yeah, I'd be happy with a system where prediction platforms are used as an additional tool among many to evaluate claims, as long as they aren't used as a replacement for those other methods.
Part of doing this sucessfuly would be a clear-headed understanding of their limitations, so I'm glad you wrote this up!
I worked for Metaculus briefly and disastrously. They were quite obsessed with this idea of allocating decisions and funding based on Metaculus questions and simply would not understand the obvious point you are making here. I think it ultimately stemmed from Anthony lacking time to devote to "his" project while being extremely badly ignorant of how to properly hand it off to someone. So we ended up in a situation where the out-of-touch founder would have these ideas he was so sure about, and all the crazy then-CEO cared about was placating the founder and similar outside stakeholders so there was no clear process for reversing these stupid decisions.
I have to tell you that prior to working at Metaculus, I was non-EA but for the most part favorably disposed to them, or to who I thought they were. After seeing what it was actually like, I have come around to the conviction that the EA community is a massive disgrace and all of their supposed beliefs are hypocritical half-beliefs in the manner of a religion. When you give money to an EA organization it is likely to go to sending people to fake conferences, or hiring their buddy's project for services they would never otherwise have hired, and so on. The whole thing is functionally just a competition for places, most of which will never be obtained, pretending to be some kind of philosophical social movement. This is actually pretty obvious as soon as you get any kind of serious handle on these places, and the only reason EAs don't know it is that to be an EA is almost definitionally to be an inexperienced and impractical kid.
"hiring their buddy's project for services they would never otherwise have hired" is a direct reference btw to how Metaculus paid money to Verity, a worse version of Ground News, for useless services. Verity is the project of Max Tegmark, who is Anthony's longtime friend. Now that the Future of Life Institute has all that meme coin money, Tegmark has been able to hire his wife to supposedly run it. It's likely legal but it's all so blatantly and disgustingly corrupt.
Thanks for the insights! Always interesting to hear from an insider. I agree that EA tends to be very inner-circle-y, in fact I made a whole post about it: https://bobjacobs.substack.com/p/how-democratic-is-effective-altruism
Though I will say that the "global development" and to a lesser extend the "animal welfare" charities that EAs promote are still pretty good. It is, in my opinion, mostly the "meta-EA" and "longtermism" charities that people should be wary of.
Right, GiveWell was always my model of what EA was before I knew what EA really was, and back when I liked EA. In my view it's basically an indulgence-buying project to try and rub off some perceived virtue on the weirdos who want to fill the lightcone with shrimp or whatever it is that they're doing.
Fascinating post. I didn't know how often outcomes are influenced deliberately to profit from these markets. Still, it seems like these problems are solvable. Betting markets themselves would profit from banning people from participating if they can directly influence the outcome, or at least forcing those people to make all of their trades without anonymity.
Betting platforms (and let’s not give unearned valor to these by calling them prediction markets) are an u equivocally bad idea.
They have caused immense harm and no societal gain in the sports betting sector, and will cause even more harm in the political sector.
You rightly point out issues with addiction and perverse incentives, yet you barely mention the mammoth risk of malign agents.
The Russians, Saudis, and high-wealth individuals would find it a trivial task to wildly affect the market. If Trump is trailing, a series of bets involving a trivial amount of money could dramatically pervert prediction.
This could be stopped by creating finite pools, but that would be easily hacked as well.
The entire exercise of these markets, while perhaps academic in the past, is profit and speculation, and the potential harm is immense. There should be no conversation about promoting or legalizing.
> and high-wealth individuals would find it a trivial task to wildly affect the market
I actually talked about this in a previous post: https://substack.com/@bobjacobs/p-137844099
> This could be stopped by creating finite pools, but that would be easily hacked as well.
Agreed, though maybe "no pool" "markets" (something akin to metaculus) could still work?
The challenge is that if it is just “chits” you lose the pricing function, it if it is cash-driven it is gamed (or irrelevant).
I would be remiss if I failed to mention that AI will make all of these markets fraud machines.
perhaps there is a world where there is strict, traceable identity, but I am not sure that is realistic.
Prediction markets or speculative markets are useful in any economy with a sound basis. These markets act as signaling when the requirements are properly are met. The difficulty is that the requirements haven't been met for quite a long time now, and they haven't been met because of various forms of money-printing, or betting on leverage which indirectly ties to money-printing (in its infinitely conceivable forms).
When you can bet more than you have, you utilize the full distorting power of money-printing when that bet goes bad. Someone has to pay it, if its not the person making the bet, its everyone holding the currency, and this is what most people misunderstand. The problems we see today aren't problems in small niche areas, they are chasms that have been carved out underneath everyone's feet for decades with most unaware of the danger, seeing small crevasse here and there as merely the small ups and downs of nature.
I'm sorry, I don't see the link between acting on market incentives and money printing. Are you saying that what e.g. Jontay Porter did is a kind of money printing?
The issue is a bit more fundamental, and I was speaking more to general speculative markets and what's required for them to provide benefit.
For markets to function correctly, you need three things: independent adversarial decision-making, price discovery, and a relatively constant value constraint, all other things being equal.
The fiat monetary system we find ourselves in today has degraded the markets, and money-printing happens regularly in ways that both lag and are not immediately visible.
Money-printing creates distortions where the parties involved cooperate even when they don't know they are doing so, and it results in fundamentally chaotic whipsaws creating distortions as the money goes through the economy.
For example, frequent flyer miles are one form of money-printing, the airlines sell those flier miles which they print from thin air to Credit Card companies, who use money they get from their underwriters, which gets printed from a bank without reserve requirements (that eventually gets trued up during or immediately after a cyclical 8-10 year banking crisis).
What you may not be aware of is that in 2020, the Fed and most central banks around the world abandoned fractional reserve banking silently, and transitioned to a capital requirements systems which is fundamentally based in objective valuation (Basel 3). If you go to the Fed website, you'll see deposit requirements are set to 0%; which confirms this. Valuation has been proven to be based in subjective value, and so that system is a very poor choice.
This money-printing goes for paper warrants in the Commodity markets (which have had quite a lot of speculation), where paper:physical has a ratio of over 300+:1 oversubscription and as long as its within the COMEX vaults, any physical is paper and vice versa.
Wall street have also used PFOF and Options Contracts with a privileged market position as a market-maker to do the same thing with regards to synthetic shares which are treated as real shares that don't actually exist, but the financial systems have no way to remove such shares or track them. This has allowed the major players to consolidate all transactions into Dark Pools which don't impact the listed price, and over half of all transactions occur now in these Dark Pools (no price discovery).
In your example of Jontay Porter, he cooperated with an entity to print himself some money for profit, though at the individual level this is arguably constrained unless their is a tie leading back to a bank. Its distorting power is limited in that respect because not all will be collectible downstream; but yes it is a form of money-printing when offering non-reserve credit.
I was speaking more broadly, since these issues start at the source of money. The issues simply snowballs as it travels downhill, and the chaos grows mathematically which are common behaviors in historic money-printing environments.
In many respects markets, and by extension economies are like n-body limited visibility astrophysics problems. When there are only two interacting bodies (a buyer a seller) its stable, but the moment a third comes into play that dramatically impacts the two towards cooperation, it becomes mathematically chaotic where small inputs create massive changes in outcome given sufficient time in those systems.
Most outcomes in such modeled systems end in collapse to a single body, or expulsion from the system. Similar dynamics occur at the micro and macro levels, and if those outcomes came to pass there would be societal issues over food production if Catton is correct.