Prediction markets or crowdsourcing?

Are markets more accurate than polls? The surprising informational value of “just asking”

Psychologists typically measure beliefs and preferences using self-reports, whereas economists are much more likely to infer them from behavior. Prediction markets appear to be a victory for the economic approach, having yielded more accurate probability estimates than opinion polls or experts for a wide variety of events, all without ever asking for self-reported beliefs. We conduct the most direct comparison to date of prediction markets to simple self-reports using a within-subject design. Our participants traded on the likelihood of geopolitical events. Each time they placed a trade, they first had to report their belief that the event would occur on a 0–100 scale. When previously validated aggregation algorithms were applied to self-reported beliefs, they were at least as accurate as prediction-market prices in predicting a wide range of geopolitical events. Furthermore, the combination of approaches was significantly more accurate than prediction-market prices alone, indicating that self-reports contained information that the market did not efficiently aggregate. Combining measurement techniques across behavioral and social sciences may have greater benefits than previously thought.

Skills gap, again

An excellent piece arguing against the “skills gap” hypothesis. The conclusion:

There is no denying the importance of education and training to long-term outcomes for workers. But that does not mean the solution to stagnant or inadequate wage increases lies in addressing a skills gap. To address the wage problem, Congress and regulators need to ensure that workers retain the ability to organize into unions, and unions need to have the power to bargain collectively—and effectively—to negotiate fair wage levels. In addition, policymakers need to establish wage floors that spill over into higher pay for workers along the distribution. Policies like these will compensate for power imbalances that have maintained wage stagnation.

It is possible to overstate the importance of skills, and it’s also possible to understate it. But that piece is well done and links to great evidence throughout. My writing on this subject is here, here, here.