What’s Wrong With Betting?

The forecasting model of Nate Silver, perhaps the best known pollster of the 2012 election cycle, predicts an Obama victory, and conservatives have been predictably upset by this fact. For example:

On MSNBC’s “Morning Joe” today, Joe Scarborough took a more direct shot, effectively calling Silver an ideologue and “a joke.”

Scarborough rejected the validity of Silver’s model. Silver’s response to Scarborough was, essentially, put your money where your mouth is. He challenged Scarborough to a bet whereby the loser would have to donate $1000 to charity, if their predicted candidate did not win the election. If Obama won, Scarborough would pay, and Silver would pay in the event of a Romney victory.

Alex Tabarrok defends the bet:

Overall, I am for betting because I am against bullshit. Bullshit is polluting our discourse and drowning the facts. A bet costs the bullshitter more than the non-bullshitter so the willingness to bet signals honest belief. A bet is a tax on bullshit; and it is a just tax, tribute paid by the bullshitters to those with genuine knowledge.

However, the Public Editor of the New York Times, where Silver works, criticized Silver. Her statement is bewildering. Challenging people to a bet is “a bad idea – giving ammunition to the critics who want to paint Mr. Silver as a partisan who is trying to sway the outcome.” Why? She doesn’t elaborate.

Perhaps the intuition is that calling people on bullshit is generally rude? And Silver’s rudeness to a Republican partisan demonstrated that he was a Democratic partisan? Perhaps calling out a friend or acquaintance on bullshit is rude, but the same consideration should not apply between pundits, particularly when one pundit has essentially called the other a partisan hack. A bet would be a strong signal that Silver wasn’t trying to sway the election, that he actually had independent faith in his model’s predictive strength. That’s an entirely appropriate signal for a pundit to give, particularly when his objectivity has been called into question.

The Anti Self-Help Book

If I were forced at gunpoint to write a self-help book, I would probably focus on two points.

1) Suspect advice from other people.

People who give you advice have very different incentives than you do. They receive little or no benefits for giving good advice, and they usually don’t pay the costs of bad advice. This ought to affect how they think about giving advice, and here is some evidence that it does.

The main effect I expect this has is that advice-givers make an effort to give advice that feels good, instead of making an effort to give good advice. What sort of advice feels good to give? Probably, the advice that an altruistic and idealistic person would give. By giving this sort of advice, we affiliate with altruistic and idealistic people and improve our standing in the eyes of the advice-seeker.

Some people will object that I employ, here as elsewhere, a reductively self-interested view of human nature. Indeed, it’s true that people don’t walk about scheming of ways to eke out an extra increment of utility from every last encounter. But their unconscious motivation to do so is quite enough. It is reasonable to assume that, most of the time, people are naturally inclined, even without a conscious ulterior motive, to present themselves at their most agreeable and attractive.

This creates a difficult interaction between selfishness and altruism. Advice givers really are trying to be altruistic, but by doing so, they adopt the viewpoint of an altruistic person, and give bad advice. They give the advice that an altruistic, idealistic person would want to follow, rather than advice suited to the advice seeker, who is probably just looking for good, pragmatic advice. Instead of altruistically tarnishing their image by giving hard-nosed, pragmatic advice, they selfishly imitate altruistic people.

Of course, not all advice is created equal. Your mother really does care about the results of the advice she gives, and she probably is less concerned with how it makes her look. Your university’s career advisor does have some incentives to make sure the students she advises get placed in jobs. Commencement speakers, on the other hand, have no good incentives whatsoever, and they give the worst, most idealistic advice of all.

Perhaps the fact that this is my main piece of advice should not inspire confidence in my advice.

2) Trust your instincts.

Every human being is the product of a billion years or more of natural selection. This means that not just our bodies, but also our minds, have been molded to best serve our interests. Every one of us is born with a package of appetites, instincts, and intuitions that are well-suited to guide us through life.

Hold on, you might say, evolution serves the interests of our offspring, not our own interests. People have conscious goals besides maximizing their number of offspring. This is true enough. Serendipitously though, most of the things that humans strive for, success, status, wealth, friendship, family, and love, are generally consistent with our “evolutionary” interest in maximizing our offspring, and it’s no accident. Natural selection gave humans these goals, because they were compatible with natural selection. For the most part, natural selection ought to have also given people instincts as well suited to these goals as possible.

It’s easy to overstate this point. Obviously, our instincts operate at a certain level of generality. It may be impossible for our minds to evolve to successfully confront every specific problem, so evolution may emphasize certain heuristic devices. There does seem to be no end to the number of situations for which behavioralists have shown the human mind to be very poorly equipped. Furthermore, humans’ current environment may be quite a bit different from the ones in which our intuitions evolved. As decisions become more specific and more technical, people will be more likely to need advice, or at least expert information, to make good decisions.

For larger questions, however, I suspect that most people, most of the time, can trust their instincts. Should I quit my secure but boring job and try to become an entrepreneur? Should I dump Tom for Eric? Should I go to college, or should I get a job straight from high-school? Should I study more, or worry about my social life? Is it all right for me to drink all my earnings, or do I need to start saving for retirement? Should I settle down and start a family, or focus on my career? Our instincts may be fairly well-equipped to guide us through these decisions. At the very least, they are more trustworthy than advice-givers operating under a very different set of instincts.