This episode of Freakonomics Radio is part of a two-part series on the U.S. presidency. I found the second half of the podcast (starting at about 0:35) to be the most interesting. Koleman Strumpf is an economics professor who does research on prediction markets. He explains the various ways that it is now possible to bet on the presidential election (exchanges like PredictIt). It turns out that betting markets have the potential to be more accurate than polling and are especially good at predicting outcomes of hyperlocal events. They respond instantly to new information while polling usually lags at least several days behind.
Stumpf points out a few issues with betting markets. For example, some only use cryptocurrency for betting. In these cases, the pool of betters might be skewed for political bets since crypto enthusiasts tend to lean right (betting markets also tend to be younger and more male than the electorate). There is the potential for entities to place bets in order to hedge against an alternative outcome (e.g., a company stands to lose big if Trump is elected so they bet on him to reduce their losses if he does win). Finally, as in any betting market, manipulation is possible (e.g., a candidate bets against themselves and then throws the election).
Political polling is struggling to adapt to new era of mobile phone use. Large errors in the polling in the last several election cycles have left pollsters struggling to adjust and weight their models to provide the best representation of the electorate. Despite their flaws, the betting markets do provide an alternative perspective to complement polling (at the time of this writing, Kamala Harris is significantly underwater in election betting on PredictIt).
Note: The first half of this episode revisits an interview with Eric Posner about the power of the presidency and the possibility of a U.S. president becoming a dictator. Posner comes off as pretty sanguine in the face of a second Trump presidency, arguing that becoming a dictator is actually really hard! I thought that this audio essay, which identifies Trump's disinhibition as his most important trait, is a good complement to Posner's optimism.
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