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I like a lot of what is said in this piece. Background: I am currently supporting myself by betting on politics and economics. I was caught jobless when this t

I like a lot of what is said in this piece. Background: I am currently supporting myself by betting on politics and economics. I was caught jobless when this thing hit, halting my attempt at a career switch into either coding or data science. At the end of February I posted my first forecast for 200k cases by March 20th, giving it a 96% chance. I feel like there exists the possibility of doing better, and there exist people who are already there but no one wants to listen or change. Watching this thing since the start of the year has been like watching a preventable slow motion crash, where many people seemed to be trying their hardest to intentionally fail. Let's not just blame the MSM or "elites" either. I speak to people who confidently assert everything is going to be fine in a year, and when pressed for a probability it's not even in top quartile. Even if it was 90% certain, a 10% chance of a significantly negative outcome is too high. I can open any thread on HN regarding economics and the general level of arrogant ignorance is staggering. We're on target to massively screw up the economic relief, which will make the economic stimulus phase all the more challenging. People need to be more predisposed to having possible intellectual and knowledge blind spots. But I'm not all negative, as I remain very optimistic that people will continue to ignore reasonable warnings.

starpilot 6y ago
Where do you bet for money to "support yourself"? Good Judgment Open doesn't have cash awards.
- graeme 6y ago
  Had they made that bet with out options in mid to late feb they could be a millionaire. For political bets you can bet on betting sites. Much harder to earn an income though.
  - tomp 6y ago
    Although market reaction is fundamentally hard to predict. It caughy many by surprise that markets reacted positively when Trump was elected. Or when there’s 150k people dead from coronavirus.
  - TheCowboy 6y ago
    This is one of the rare times that I obviously should have done just that, but usually it's hard (for me at least) to really think of ways to carry some forecast over into the stock markets.
    - graeme 6y ago
      Yeah I’m kicking myself over it. I knew enough to withdraw my money from the market on the 24th (took the decision the 22nd on a weekend). But I literally forgot about puts. I was under the impression you had to be an accredited investor. I was thinking about withdrawing on the 20th/21st of feb, when spread happened in Korea and Italy locked down some northern towns. Puts were still very cheap then.
      - TheCowboy 6y ago
        I try not to beat myself over things like this but it's good to explore why I didn't make a decision and absorb any lessons.
        graeme 6y ago
        Yeah I did the latter. Now I know how the relevant instruments work if another such opportunity arises.
- NateEag 6y ago
  Prediction markets. https://en.m.wikipedia.org/wiki/Prediction_market https://en.m.wikipedia.org/wiki/Prediction_market Stock markets and futures exchanges can be reasonably modeled as placing bets, too.
  - starpilot 6y ago
    I'm aware of them. None of them let you bet (for money) on the number of COVID-19 cases with a % likelihood like OP describes.
    - SilasX 6y ago
      True story: Intrade let you bet on the swine flu count, as reported in major media sources, and I bet that there would be 50,000 cases in the US by the end of June 2009. Then they changed it to "CDC official count" before the bet resolved, and the CDC decided to stop updating it, so I lost the bet even though there were 50k cases by the terms of the original bet.
      - breischl 6y ago
        Were they allowed to do that under the terms of the contract or something like that? If not, it sounds like fraud. If so, it sounds like a way to never make any significant payouts...
        SilasX 6y ago
        Not like I could sue, since it was hosted in Ireland :-( And in effect they could do whatever they wanted.
    - TheCowboy 6y ago
      I still play on GJOpen if not only because the variety of topics is greater but I also like some of the players there and what they have to say. Brier score approaches also feel more rigorous.
roenxi 6y ago
It exposes an interesting flaw in people's thinking where they hear percent and immediately convert it to a binary (75% -> Yes, 29% -> No). If pressed most would probably claim to understand that 75% means "every 4th time we see this it won't work" and 29% "nearly every 3rd time it will", but in my experience most people act more appropriately for the binary outcome than the probabilistic one. Thinking and acting to the probability model is almost a superpower; I keep finding I'm ready for 1 in 10 style events that other people don't see coming. After being told authoritatively there is a 10% chance of it happening, no less. Eg, I will look at what a 1:100 year rain event in an area will cause then make long term decisions around it.
- tomp 6y ago
  > I keep finding I'm ready for 1 in 10 style events that other people don't see coming. Surely if you’re ready for more than 10% of 1-in-10 events, your probabilities are just as wrong as other people’s; it’s just that your risk management is better. That is why I don’t like probabilities for what are fundamentally one-off events.
  - roenxi 6y ago
    I posted a comment saying "a common mistake is thinking 10% = No" and you've responded by with something that looks a lot like "you're making a mistake thinking 10% = yes". My suggestion is you don't have enough information to claim I'm making any specific mistake.
    - deleted 6y ago
      [deleted]
    - jodrellblank 6y ago
      You prepare for a 1 in 10 chance event which other people don't prepare for; i.e. is you act exactly as if you think it will certainly happen, but you tell yourself you don't think it will certainly happen? This sounds like a distinction without meaning. Using "people mistake my preparation for me believing that it will happen, so they are dumb" is weird. You're acting as if you think it will happen, of course people think you think it will happen. Why else would you bother preparing? You're not buying 10% of the sandbags you'd need, you're buying 100% of them because nothing else would do. "Oh but I'm smarter" but your belief is leading you to take the same actions as the person who thinks 10% == yes, so in what way is it smarter? In what way is it different?
perl4ever 6y ago
"I am currently supporting myself by betting on politics and economics." So what do you think of the stock market rebound?
- TheCowboy 6y ago
  Historically I've stayed away, and view index funds as the way to go. I have no training in finance or stock valuation. It's easier for me to think about probabilities than what the pricing of Tesla means. The rebound does seem like early overconfidence, but could be a bet on the fact that public corporations are more likely to get bailouts than not. I hope the markets are right that it's more than that. But markets seem to do a lot of dumb things over the short and medium term.
vanniv 6y ago
> I can open any thread on HN regarding economics and the general level of arrogant ignorance is staggering. This is a problem very generally -- and is significantly exacerbated by the highly-polarized nature of our society at present. Right now, virtually anything interesting becomes a part of the political identity fight immediately -- and once that happens, reinforcing the narrative is more important than anything else. Not just by people actively trying to advance the narrative -- but because people collectively only talk to other people from their tribe, and so they get facts and "facts" that fit the narrative. The Coronavirus is no exception. In early February, it was a Republican/Right position that the Coronavirus was dangerous and a Democrat/Left position that Coronavirus fears were an excuse to hate Asian/Chinese people. Ironically, now, in April, it's a Republican/Right position that Coronavirus fears are dramatically overblown / a crisis being exaggerated for political or economic gains, and it's now a Democrat/Left position that the Coronavirus is a near-existential level threat that requires the strongest response possible. These positions were initially formed from data, but once the narratives are chosen, partisans do what partisans do -- and since basically everybody is hyperpartisan now, that means we get where we are.
- tonyedgecombe 6y ago
  This seems to be a particularly American issue. Even in the UK post Brexit it hasn't happened. There has been the odd gentle prod but in general the opposition has supported the stance taken by the government.
  - makomk 6y ago
    The UK opposition party has been supportive, but I can't say the same thing about the press or their supporters in the general population - that's still really hyper-partisan and has imported a bunch of the US narratives as well.
    - tonyedgecombe 6y ago
      Yes, the UK press has been terrible. Surprisingly (or maybe not) the best coverage seems to have come from the business press.
VHRanger 6y ago
Where do you bet? Betting markets like predicit?
- TheCowboy 6y ago
  Yes, PredictIt. I didn't want to say it because I don't think anyone here who is feeling stressed about money should consider it an option. I had a least a year or more of practice on a play money site, Hypermind, which has real money prize pools.
  - yellowstuff 6y ago
    I looked into the economics of PredictIt a few years back. * Fees are high. They charge 10% of profits and and additional 5% for withdrawals. * Markets were illiquid. There aren't enough shares available to put much money to work. There's an $850 limit per bet, but it's hard to reach that amount. * Bets can take a long time to settle. So even if you are 90% certain of something trading at 50%, you can't put a ton of money into that view, nor can you necessarily get paid quickly. * Occasionally bets are determined by dumb technicalities. As I recall the bet for Powell being the next Fed chair settled on No, because the date referenced in the bet was a holiday or something, and he was confirmed on the next business day. If you are smart enough to make significant money on PredictIt aren't you smart enough to make more money doing almost anything else?
    - TheCowboy 6y ago
      > Fees are high. Yep. I was skeptical about if they were beatable initially. > Markets were illiquid. Not always true. This varies a lot between markets. If you look at the Democratic nominee markets, you can buy as many shares you like. > $850 limit This is per bracket. So you can max No on several candidates in a market if you want, and PI also refunds the amount that is impossible to lose since only one can resolve as Yes. There are also a lot of correlated markets that are effectively the same bet. You can bet on Biden being the nominee at least 4 different ways if you want. > Bets can take a long time to settle. You can sell at any point in time. No need to wait. There are long and short term markets. If there was something 50% that was 90%, I'd have no problem taking that bet. But it's something like a 2020 election you can always wait until closer to the election. Though some markets appreciate during that span of time. > dumb technicalities > Powell being next Fed chair Always read the rules. All predictions are useless without a time. Powell market was free money. The good players were telling people the correct answer in the comments for months but people didn't want to listen. Amazing. > aren't you smart enough to make more money doing almost anything else? That's what I was aiming for before the economic shock, but it's not like people think "Oh you won money at bet on politics? Here is job"
baryphonic 6y ago
I overall agree with the tone of this post. It's as if everyone who feels smugly clever is sitting around a TV broadcast with horrible static (this is the old school type with rabbit ear antennae), yet a whole slew of them are certain they can see and hear clearly exactly what is happening. To put this in different terms, we have witnessed the media, government officials, "elites," HN commenters, etc. partake in the high-status equivalent of millenarian preachers emphatically predicting the rapture (repeatedly), but this time with human lives in the crosshairs. In fact, I think the only criticism that can be leveled at these groups are ignorance of risk mitigation strategies and cost-benefit analysis. More or less what Scott put in his post. (Short aside: the mask calculus seemed incredibly obvious to me from the start. I was not embarrassed to wear a mask on a flight back east from CA in late February, but I did hear about my stupidity from quite a few of the aforementioned. Including my wife. Who knows if the masks work, but the critics failed critical thinking 101. They're all Goofi. Except my wife.) With that in mind (and at the risk of indulging in what might consider "arrogant ignorance"), I would like to gently push back on this sentence: > We're on target to massively screw up the economic relief, which will make the economic stimulus phase all the more challenging. People need to be more predisposed to having possible intellectual and knowledge blind spots. What specifically are you referring to? Is the rescue plan doing too little? Too much? No effect? Is Congress making uncertainty worse by not replenishing the fund for small business loans? Are they even a good idea? The problem is no one can say much of anything about this crisis because it's unprecedented. We haven't had a financial crisis or some spontaneous crash in asset prices. The shock came from the real economy first, at least as far as I can tell. I debate with my economist friends (most of whom have advanced degrees in the subject beyond my B.S.) about whether this is even mostly a supply or demand shock. The opinion is mixed (two economists -> three opinions). I've probed what policy responses should be enacted from a variety of perspectives, or what economic recovery looks like. All over the map again. I've been a bit more optimistic than most, since I see this as primarily a demand shock starting with entertainment, travel and hospitality and then spreading to other sectors (enforced by fiat). Keynesian response might be quite effective. And the rescue plan is quite close to what Keynes himself wrote in ch. 24 of the General Theory: nationalized investment and income redistribution to those with the highest marginal propensity to consume. But my assumptions could be way off. It could be that this thing really was a supply shock through and through, or that debt of all types really has been untenably high, or that there are serious problems that have arisen in the real economy as a result of the crisis. I do find that alongside degrees of confidence (which is a good mental cold shower for making bold claims) some skin in the game is useful as well. (Mine is that I have a $10 bet with a friend that $DIS will be above $120/share on August 1 (might lose that one) and that I've moved a few grand from cash into the market at times during the past 7 weeks or so.) I really appreciate that you gave a clue that you have made some bets, but I'd be curious as to what those are. That would represent some skin in the game as well, and reflect your beliefs about what the economic problems will be. I will say I know a lot more about economics, but I was a lot more confident that an epidemic would occur than I am about any particular short-run economic outcome.

starpilot 6y ago

Where do you bet for money to "support yourself"? Good Judgment Open doesn't have cash awards.

graeme 6y ago
Had they made that bet with out options in mid to late feb they could be a millionaire. For political bets you can bet on betting sites. Much harder to earn an income though.
- tomp 6y ago
  Although market reaction is fundamentally hard to predict. It caughy many by surprise that markets reacted positively when Trump was elected. Or when there’s 150k people dead from coronavirus.
- TheCowboy 6y ago
  This is one of the rare times that I obviously should have done just that, but usually it's hard (for me at least) to really think of ways to carry some forecast over into the stock markets.
  - graeme 6y ago
    Yeah I’m kicking myself over it. I knew enough to withdraw my money from the market on the 24th (took the decision the 22nd on a weekend). But I literally forgot about puts. I was under the impression you had to be an accredited investor. I was thinking about withdrawing on the 20th/21st of feb, when spread happened in Korea and Italy locked down some northern towns. Puts were still very cheap then.
    - TheCowboy 6y ago
      I try not to beat myself over things like this but it's good to explore why I didn't make a decision and absorb any lessons.
      - graeme 6y ago
        Yeah I did the latter. Now I know how the relevant instruments work if another such opportunity arises.
NateEag 6y ago
Prediction markets. https://en.m.wikipedia.org/wiki/Prediction_market https://en.m.wikipedia.org/wiki/Prediction_market Stock markets and futures exchanges can be reasonably modeled as placing bets, too.
- starpilot 6y ago
  I'm aware of them. None of them let you bet (for money) on the number of COVID-19 cases with a % likelihood like OP describes.
  - SilasX 6y ago
    True story: Intrade let you bet on the swine flu count, as reported in major media sources, and I bet that there would be 50,000 cases in the US by the end of June 2009. Then they changed it to "CDC official count" before the bet resolved, and the CDC decided to stop updating it, so I lost the bet even though there were 50k cases by the terms of the original bet.
    - breischl 6y ago
      Were they allowed to do that under the terms of the contract or something like that? If not, it sounds like fraud. If so, it sounds like a way to never make any significant payouts...
      - SilasX 6y ago
        Not like I could sue, since it was hosted in Ireland :-( And in effect they could do whatever they wanted.
  - TheCowboy 6y ago
    I still play on GJOpen if not only because the variety of topics is greater but I also like some of the players there and what they have to say. Brier score approaches also feel more rigorous.

roenxi 6y ago

It exposes an interesting flaw in people's thinking where they hear percent and immediately convert it to a binary (75% -> Yes, 29% -> No). If pressed most would probably claim to understand that 75% means "every 4th time we see this it won't work" and 29% "nearly every 3rd time it will", but in my experience most people act more appropriately for the binary outcome than the probabilistic one. Thinking and acting to the probability model is almost a superpower; I keep finding I'm ready for 1 in 10 style events that other people don't see coming. After being told authoritatively there is a 10% chance of it happening, no less. Eg, I will look at what a 1:100 year rain event in an area will cause then make long term decisions around it.

tomp 6y ago
> I keep finding I'm ready for 1 in 10 style events that other people don't see coming. Surely if you’re ready for more than 10% of 1-in-10 events, your probabilities are just as wrong as other people’s; it’s just that your risk management is better. That is why I don’t like probabilities for what are fundamentally one-off events.
- roenxi 6y ago
  I posted a comment saying "a common mistake is thinking 10% = No" and you've responded by with something that looks a lot like "you're making a mistake thinking 10% = yes". My suggestion is you don't have enough information to claim I'm making any specific mistake.
  - deleted 6y ago
    [deleted]
  - jodrellblank 6y ago
    You prepare for a 1 in 10 chance event which other people don't prepare for; i.e. is you act exactly as if you think it will certainly happen, but you tell yourself you don't think it will certainly happen? This sounds like a distinction without meaning. Using "people mistake my preparation for me believing that it will happen, so they are dumb" is weird. You're acting as if you think it will happen, of course people think you think it will happen. Why else would you bother preparing? You're not buying 10% of the sandbags you'd need, you're buying 100% of them because nothing else would do. "Oh but I'm smarter" but your belief is leading you to take the same actions as the person who thinks 10% == yes, so in what way is it smarter? In what way is it different?

perl4ever 6y ago

"I am currently supporting myself by betting on politics and economics." So what do you think of the stock market rebound?

TheCowboy 6y ago
Historically I've stayed away, and view index funds as the way to go. I have no training in finance or stock valuation. It's easier for me to think about probabilities than what the pricing of Tesla means. The rebound does seem like early overconfidence, but could be a bet on the fact that public corporations are more likely to get bailouts than not. I hope the markets are right that it's more than that. But markets seem to do a lot of dumb things over the short and medium term.

vanniv 6y ago

> I can open any thread on HN regarding economics and the general level of arrogant ignorance is staggering. This is a problem very generally -- and is significantly exacerbated by the highly-polarized nature of our society at present. Right now, virtually anything interesting becomes a part of the political identity fight immediately -- and once that happens, reinforcing the narrative is more important than anything else. Not just by people actively trying to advance the narrative -- but because people collectively only talk to other people from their tribe, and so they get facts and "facts" that fit the narrative. The Coronavirus is no exception. In early February, it was a Republican/Right position that the Coronavirus was dangerous and a Democrat/Left position that Coronavirus fears were an excuse to hate Asian/Chinese people. Ironically, now, in April, it's a Republican/Right position that Coronavirus fears are dramatically overblown / a crisis being exaggerated for political or economic gains, and it's now a Democrat/Left position that the Coronavirus is a near-existential level threat that requires the strongest response possible. These positions were initially formed from data, but once the narratives are chosen, partisans do what partisans do -- and since basically everybody is hyperpartisan now, that means we get where we are.

tonyedgecombe 6y ago
This seems to be a particularly American issue. Even in the UK post Brexit it hasn't happened. There has been the odd gentle prod but in general the opposition has supported the stance taken by the government.
- makomk 6y ago
  The UK opposition party has been supportive, but I can't say the same thing about the press or their supporters in the general population - that's still really hyper-partisan and has imported a bunch of the US narratives as well.
  - tonyedgecombe 6y ago
    Yes, the UK press has been terrible. Surprisingly (or maybe not) the best coverage seems to have come from the business press.

VHRanger 6y ago

Where do you bet? Betting markets like predicit?

TheCowboy 6y ago
Yes, PredictIt. I didn't want to say it because I don't think anyone here who is feeling stressed about money should consider it an option. I had a least a year or more of practice on a play money site, Hypermind, which has real money prize pools.
- yellowstuff 6y ago
  I looked into the economics of PredictIt a few years back. * Fees are high. They charge 10% of profits and and additional 5% for withdrawals. * Markets were illiquid. There aren't enough shares available to put much money to work. There's an $850 limit per bet, but it's hard to reach that amount. * Bets can take a long time to settle. So even if you are 90% certain of something trading at 50%, you can't put a ton of money into that view, nor can you necessarily get paid quickly. * Occasionally bets are determined by dumb technicalities. As I recall the bet for Powell being the next Fed chair settled on No, because the date referenced in the bet was a holiday or something, and he was confirmed on the next business day. If you are smart enough to make significant money on PredictIt aren't you smart enough to make more money doing almost anything else?
  - TheCowboy 6y ago
    > Fees are high. Yep. I was skeptical about if they were beatable initially. > Markets were illiquid. Not always true. This varies a lot between markets. If you look at the Democratic nominee markets, you can buy as many shares you like. > $850 limit This is per bracket. So you can max No on several candidates in a market if you want, and PI also refunds the amount that is impossible to lose since only one can resolve as Yes. There are also a lot of correlated markets that are effectively the same bet. You can bet on Biden being the nominee at least 4 different ways if you want. > Bets can take a long time to settle. You can sell at any point in time. No need to wait. There are long and short term markets. If there was something 50% that was 90%, I'd have no problem taking that bet. But it's something like a 2020 election you can always wait until closer to the election. Though some markets appreciate during that span of time. > dumb technicalities > Powell being next Fed chair Always read the rules. All predictions are useless without a time. Powell market was free money. The good players were telling people the correct answer in the comments for months but people didn't want to listen. Amazing. > aren't you smart enough to make more money doing almost anything else? That's what I was aiming for before the economic shock, but it's not like people think "Oh you won money at bet on politics? Here is job"

baryphonic 6y ago

I overall agree with the tone of this post. It's as if everyone who feels smugly clever is sitting around a TV broadcast with horrible static (this is the old school type with rabbit ear antennae), yet a whole slew of them are certain they can see and hear clearly exactly what is happening. To put this in different terms, we have witnessed the media, government officials, "elites," HN commenters, etc. partake in the high-status equivalent of millenarian preachers emphatically predicting the rapture (repeatedly), but this time with human lives in the crosshairs. In fact, I think the only criticism that can be leveled at these groups are ignorance of risk mitigation strategies and cost-benefit analysis. More or less what Scott put in his post. (Short aside: the mask calculus seemed incredibly obvious to me from the start. I was not embarrassed to wear a mask on a flight back east from CA in late February, but I did hear about my stupidity from quite a few of the aforementioned. Including my wife. Who knows if the masks work, but the critics failed critical thinking 101. They're all Goofi. Except my wife.) With that in mind (and at the risk of indulging in what might consider "arrogant ignorance"), I would like to gently push back on this sentence: > We're on target to massively screw up the economic relief, which will make the economic stimulus phase all the more challenging. People need to be more predisposed to having possible intellectual and knowledge blind spots. What specifically are you referring to? Is the rescue plan doing too little? Too much? No effect? Is Congress making uncertainty worse by not replenishing the fund for small business loans? Are they even a good idea? The problem is no one can say much of anything about this crisis because it's unprecedented. We haven't had a financial crisis or some spontaneous crash in asset prices. The shock came from the real economy first, at least as far as I can tell. I debate with my economist friends (most of whom have advanced degrees in the subject beyond my B.S.) about whether this is even mostly a supply or demand shock. The opinion is mixed (two economists -> three opinions). I've probed what policy responses should be enacted from a variety of perspectives, or what economic recovery looks like. All over the map again. I've been a bit more optimistic than most, since I see this as primarily a demand shock starting with entertainment, travel and hospitality and then spreading to other sectors (enforced by fiat). Keynesian response might be quite effective. And the rescue plan is quite close to what Keynes himself wrote in ch. 24 of the General Theory: nationalized investment and income redistribution to those with the highest marginal propensity to consume. But my assumptions could be way off. It could be that this thing really was a supply shock through and through, or that debt of all types really has been untenably high, or that there are serious problems that have arisen in the real economy as a result of the crisis. I do find that alongside degrees of confidence (which is a good mental cold shower for making bold claims) some skin in the game is useful as well. (Mine is that I have a $10 bet with a friend that $DIS will be above $120/share on August 1 (might lose that one) and that I've moved a few grand from cash into the market at times during the past 7 weeks or so.) I really appreciate that you gave a clue that you have made some bets, but I'd be curious as to what those are. That would represent some skin in the game as well, and reflect your beliefs about what the economic problems will be. I will say I know a lot more about economics, but I was a lot more confident that an epidemic would occur than I am about any particular short-run economic outcome.