Every four years, large numbers of people waste countless hours of their lives toiling under the delusion that they will be able to predict who one or both political party’s presidential nominee will be. Some people gather information from oodles of disparate sources — polls, fundraising numbers, media coverage, historical trends, debate performance, sentiment of party insiders, etc. — and often wind up focusing so intently on certain data points that they miss the forest for the trees and get it completely wrong. Others cherry-pick from much of that same information and attempt to use it to retroactively justify the inevitably candidacy of the politician they happen to like. (There is a lot of overlap between these two groups, however unintentional.) Others just bullshit like hell and sometimes end up being more right than the experts.
Often this is done in service of “journalism” or campaign emails telling you to DONATE NOW, but today we are going to talk about the people who do it for pure, unadulterated profit. As I’ve written for The Outline previously, the website PredictIt is a political prediction market, in which users buy “shares” of an outcome they believe will occur, whether it’s which justice will be Trump’s next Supreme Court nominee, which party will win the 2020 presidential election, or the number of times Andrew Yang will tweet this week. While yes, this is basically just gambling on politics, prediction markets do have genuine value for election forecasters such as Nate Cohn of The New York Times and Nate Silver of 538, the latter of whom, I noted in my previous piece, “has written that [prediction markets] tend to mimic his website’s forecasts more than conventional polling data does.”
In the past couple of weeks, however, the PredictIt market for the 2020 Democratic presidential race has developed an anomaly that truly boggles the mind. While conventional polling indicates a dead heat between an ascendent Elizabeth Warren and a slowly receding, bleeding-from-the-eyes Joe Biden, with Bernie Sanders behind both in a competitive third place, PredictIt’s market for the same race looks nothing like that at all. For one, they’ve got Warren way out in front of Biden, at 48 cents to 21 cents (each PredictIt market divides its shares into portions of a dollar, both to keep things cheap and to mimic actual polls), and Sanders in sixth place.
The space between Warren and Sanders, though, is where shit gets wild. Have a look for yourself:
Hillary Clinton, a person who is not currently running for president, is nevertheless neck and neck with Andrew Yang, the Ron Paul of the Democratic Party, for third place. (As you can see, Pete Buttigieg is in fourth, but I don’t care and neither should you.)
Ever since he announced his candidacy, Andrew Yang has performed disproportionately well on PredictIt, especially relative to Sanders. This is in part because one of Yang’s key bases of support is extremely online young men who are more interested in getting $1000 than they are in free healthcare — i.e., the type of people who are really into prediction markets.
As for Clinton, it’s a weirder and not particularly explainable situation, given that, again, she is not currently running for president. But prediction markets don’t care about what’s happening now, they care about what will happen in the future, and clearly there are people out there who think that she’s going to run for president and would have a shot at winning.
One of the arguments for the effectiveness of prediction markets is that in theory, they facilitate those with inside information anonymously coming forward and making that information known by placing a large bet on an otherwise unexpected outcome. If, say Hillary Clinton’s driver and had overheard the former Secretary of State telling someone on the phone that she was about to jump into the race, that person could hop on PredictIt and make a huge bet on Clinton becoming the nominee, which might catch the attention of other PredictIt users and cause them to also start betting on Clinton, which would in turn drive the price of her “shares” up. So: Are prediction markets trying to tell us something we’re not already privy to?
The ascendency of Hillary Clinton on PredictIt came to my attention when Kevin Munger, an Outline contributor and Political Science professor at Penn State, made a joke about it on Twitter on October 2. Since then, Munger has watched with bemusement as Clinton has crept upwards. Intrigued, I started looking at the market, trying to understand why this was happening and whether it actually meant anything. According to PredictIt’s chart of trade volume, which indicates the number of shares of Clinton being bought and sold on any given day, interest in Clinton shares originally spiked on October 2, and then jumped again on October 8. I then started Googling around to see if anything might have happened in the news on those days that might explain these upticks in trade volume. If there wasn’t, that might be a clue that someone with connections to Clinton’s camp was trying to cash in on non-public information.
The results of my search, it turned out, were head-smackingly obvious.
On October 2, Hillary Clinton appeared on The View. Alongside her daughter, Chelsea, with whom she just co-authored a book. As for the October 8 spike, well, that was because Donald Trump tweeted, “I think Crooked Hillary should enter the race,” to which Clinton (or more likely, her assistant), responded, “Don’t tempt me.”
While it’s true that presidential candidates go on The View and “tweet epic clapbacks” at Donald Trump, that’s stuff that hundreds of public figures — many of them politicians! — do as well, and none of them are running for president. In an interview with CNN, Clinton confidant Terry McAuliffe said that she’s re-emerging in the public eye because she’s got a book to sell and that “She’s having fun, but that doesn't mean she’s going to run again.” No one, not even Hillary Clinton, wants to relive the 2016 election again.
While the fact that Clinton is a contender on PredictIt isn’t proof she’s secretly getting ready to run for president again, it’s definitely proof that these markets, so vaunted by prognosticators named Nate, are sometimes driven by nothing more than a few people sitting at home saying, “Hey, I saw that person on TV!” It’s certainly a bad sign that the sort of press tours that famous people do whenever they’re trying to hawk some dumb bullcrap are often indistinguishable from modern political campaigns, but the people of PredictIt’s inability to tell the difference between the two functions as an example of the “learned insensitivity to reality” that, as Tom Whyman wrote for The Outline yesterday, is one of the primary characteristics of modern stupidity. Sometimes, the more information we gather, the less we’re sure of which bits are worth focusing on.