Friday, January 29, 2016

Predictions and prediction markets

The 1st estimate of 2015 Q4 NGDP data is available on FRED today. It appears Hypermind has removed its NGDP predictions before I had a chance to update them in the graph (and Scott Sumner has removed it from his blog's front page). So all I have to go with is the data I had when I made the graph back in July after Q2 results. Here are the updated graphs, now with annual and quarterly predictions/data separated (last Hypermind predictions are in black, previous in grays):





The prediction markets result for 2015 growth is basically indistinguishable from a log-linear extrapolation of data (shown as red dashed lines) from after 2009. The ITM (gray dashed curves) was almost exactly right, but I wouldn't read too much into that since it's not terribly different from the log-linear extrapolations (all time: solid red, since 2009: dashed red) itself.

Hypermind's blog doesn't mention the NGDP markets except generically mentioning macroeconomics: "All the predictions so far have been about politics, geopolitics, macroeconomics, business issues, and some current events." They do show a funny plot that I've seen in the research before:



The information transfer view predicts this sort of result from purely random behavior as I show in this blog post from last October:
Corporate prediction markets aggregate random behavior
The data is closer to the line in the Hypermind case simply because there were more markets and measurements, making the ideal information transfer picture a better approximation. 

3 comments:

  1. Sumner notes in his most recent post that he earned 10€ betting in a Hypermind NGDP prediction market.

    ReplyDelete
    Replies
    1. He said he shorted it early on when it said 4.1%, so that doesn't tell us what the final annual prediction was.

      Delete
    2. Sumner says:
      "Tom, The final growth rate was 2.9%"

      Delete

Comments are welcome. Please see the Moderation and comment policy.

Also, try to avoid the use of dollar signs as they interfere with my setup of mathjax. I left it set up that way because I think this is funny for an economics blog. You can use € or £ instead.

Note: Only a member of this blog may post a comment.