This is a guest post by Harry Crane, who is Professor of Statistics and Affiliated Faculty in the Graduate Program in Philosophy at Rutgers University. He is co-founder of Researchers.One, a decentralized research platform for peer review, scholarly publication, community building and research dissemination. He is also currently Fellow at the London Mathematical Institute.

Guest posts reflect the views of their authors and not necessarily mine, though I only post things that I think most readers will find interesting, possibly thought-provoking, and of value.

Harry Crane

Free markets, free speech, and free thought pose an existential threat to the Establishment. That’s why the we can measure the success of any freedom-based approach that challenges power by how hard those holding power try to destroy or suppress it.

It’s a classic top-down strategy for maintaining order. When something doesn’t fit the official narrative: Regulate, legislate, or censor it out of existence.

On its own, recognizing that the strategy exists is a threat to its effectiveness, because it only works when the group being controlled doesn’t know what’s happening. The primary reason for Cancel Culture’s failure has been its lack of discretion in wielding this sword. Cancel Culture has made apparent – to those who are still awake – just how widely this tactic is used throughout business, government, academia, and the media.

It’s central to the Establishment’s strategy on a wide range of issues. Start looking and you’ll start to notice it just about everywhere. Here I focus on how it applies to elections.

Free Markets and Elections

Who’s going to win the 2022 midterms? Specifically, which party will win control of the Senate?

According to the polls and pundits in the media, Democrats have the advantage. Voters are upset about Roe v. Wade. Democrats were 75% to win the Senate a couple weeks ago. Now it’s a toss up according to the forecasting website FiveThirtyEight.com.

But if you look at the prediction markets hosted at PredictIt -- where savvy politicos risk real money on their opinions – you’ll see that the Republicans are 90% to win the House and 72% to win the Senate.

So which is more accurate? As you’d probably expect, the markets are. This is proven out not only by common sense – free markets tend to work – but also empirically in my own research which compared forecasts by Nate Silver’s FiveThirtyEight and the markets at PredictIt for the 2018 and 2020 elections. (In the interest of transparency, if you doubt these claims, you’re welcome to read the articles yourself and comment publicly at the link provided.)

As you may have noticed, the accuracy of prediction markets compared to polls is not very well known. In keeping with the general strategy – if something is a threat, then censor it, delegitimize it, and, if necessary, kill it – Nate Silver published a recent article on why the markets aren’t to be trusted this year. Even more interesting – but again not surprising – is that the markets are more accurate than polls in a predictable way: FiveThirtyEight consistently overvalues Democrat chances relative to the markets. Is Silver purposely attempting to bias public opinion or just really bad at statistics?

Government Closing Down Prediction Markets

I don’t know. But I do know that the media covers polls and 538 consistently, with hardly any mention of the historically more accurate prediction markets. Pretty soon the media won’t even need to actively ignore the markets, because in short order there will be no more prediction markets.

That’s right. These markets pose such a threat to the institutionalists that Biden’s Commodity Futures Trading Commission (CFTC) has issued the death blow to PredictIt -- as of February 2023, it’s lights out. The CFTC also recently recommended against allowing Kalshi, another market operator, from offering prediction markets on the 2022 midterms. The CFTC is at liberty to make such decisions more or less arbitrarily, and in both cases has yet to give a clear rationale for its decision.

It’s as if they don’t want people to know about these markets. And it’s easy to understand why in light of everything already mentioned.

Oz v. Fetterman, Markets v. Polls

For a concrete example, remember a couple weeks ago when NBC interviewer Dasha Burns reported that PA Senate candidate John Fetterman struggled to communicate in their pre-interview conversation, showing lingering signs of the stroke he suffered several months back? Burns came under attack from others in the media. She was called “ableist” and all but called a liar outright, some saying that they’ve experienced no such difficulty in their interactions with Fetterman.

Kara Swisher is an editor for New York Magazine, hosts a popular podcast, and has written for the The New York Times, The Wall Street Journal and Washington Post. She has 1.4million Twitter followers

If you watched the recent Fetterman-Oz debate, you can make up your own mind on the accuracy of Burns’s initial report. However, many viewed Fetterman’s performance as vindicating Burns’s report and now there are calls for her accusers and denouncers to apologize to her because she did honest reporting.

But the beauty of prediction markets – and the reason the Establishment wants them gone – is that they take control of the narrative away from the media. You don’t have to rely on the subjective opinions of reporters, pundits, statisticians, polling companies, or even yourself. You can just follow the money.

Moments before the candidates took the stage on the night of the debate, Oz was favored slightly on PredictIt, with an estimated 52% chance of winning the PA Senate race. Within a few moments after Fetterman opened his mouth for the first time, Oz shot up to 65% and stayed near that price for the rest of the debate and the week following. (just how badly people believed Fetterman performed in the October 25 debate is shown by the jump favoring Oz from October 24 to October 25 in the plot below.) FiveThirtyEight has Fetterman leading the entire time. We'll know in a week or so which was more accurate at predicting the Pennsylvania Senatorial race outcome.

PredictIt prices on Oz (Red) and Fetterman (Blue) to win the PA Senate race. After the election, a contract on Oz is worth $1 if Oz wins, and $0 if Oz loses. A contract on Fetterman is worth $1 if Fetterman wins, $0 otherwise. Therefore, paying $0.60 for an Oz contract allows the buyer to potentially win $0.40 per contract (if Oz wins PA) or lose $0.60 (if Oz loses).

Why It Matters

When I gave this example in a recent interview about the upcoming election, the reporter was disturbed. The interview concluded shortly thereafter. The article was never written.

These markets pose an existential threat to legacy media: with such a concrete and easy to understand source as PredictIt, what opportunity does the media have to spin the narrative? If people find out about a source that is more accurate and quicker to incorporate new information, then the media ceases to be relevant.

That’s why prediction markets are such a big threat. That’s why the media doesn’t talk about them. That’s why the CFTC is killing them off. And that’s why free market solutions, like political prediction markets and markets for other legislative and policy decisions, are vitally important to neutralize Establishment manipulation over impactful decisions.

Throughout any election cycle, one question on citizens’ minds is: Who’s going to win? After the election happens, the question becomes: Who won? The two questions are closely related: if the narrative is coherent, then the person who won should usually be the person who was expected to win ahead of time. If the election is questioned, as in 2020, the coherence between pre-election polls and the post-election results can be cited as evidence of a fair election. This is why controlling the narrative before an election is integral to controlling what happens afterwards. Could this be why the media and current administration are putting extra effort to destroy all credible alternatives to biased polling? If not, feel free to offer a more plausible alternative.

Unsafe Science

Free Markets and Free Thinking