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Economists v. Everybody Else as Forecasters

Posted in Charts, Prediction Markets by teslik on August 14, 2009

The Journal’s Real Time Economics blog reports that the Philadelphia Fed has released the results of a survey it conducted of professional economic forecasters–and that 75% now expect the United States to emerge from recession in Q3 2009 (up from 54.5% three months ago). Well I checked in over at Intrade, and it turns out the general public has seen an even more dramatic swing of faith in the U.S. economy’s prospects for the quarter. Whereas three months ago, Intrade’s contract priced in a 40% chance of positive U.S. growth in Q3, now the market is pricing in a 90% chance. See the chart below.


Predicting the Next Fed Chairman

Posted in Charts, Prediction Markets by teslik on August 6, 2009

Intrade’s prediction market, which a month ago put Ben Bernanke’s probability of holding onto his Fed chairmanship in 2010 at less than 50%, now puts it over 80%. See chart below:


Intrade’s market guesses that the most likely candidates to replace Bernanke, were he not to keep his post, are Janet Yellen and Larry Summers.

Trading on Palin

Posted in Charts, Prediction Markets by teslik on July 30, 2009

I love prediction markets, not because I think they are accurate but because I’m so often surprised at what they reveal about how people are interpreting the news.  One indicator I’ve been tracking on Intrade is the market predicting whom the GOP candidate will be in 2012. Today I noticed that Sarah Palin’s “stock” has been behaving interestingly since her resignation earlier this month. See the chart, below:


She announced her resignation on July 3. At that point, Intrade’s market put the percentage probability of Palin becoming the 2012 GOP presidential nominee at 13%. The news prompted a huge selloff, on high volume, halving that percentage to 6.5% in one day. But since, her stock has steadily risen, and the market now puts her chances of emerging as the nominee at 16%–higher than before she announced her plans to step down.