November 1, 2016
Scientists are beginning to understand why these ‘mini Wall Streets’ work so well at forecasting election results — and how they sometimes fail. ... Experiments such as this are a testament to the power of prediction markets to turn individuals’ guesses into forecasts of sometimes startling accuracy. That uncanny ability ensures that during every US presidential election, voters avidly follow the standings for their favoured candidates on exchanges such as Betfair and the Iowa Electronic Markets (IEM). But prediction markets are increasingly being used to make forecasts of all kinds, on everything from the outcomes of sporting events to the results of business decisions. Advocates maintain that they allow people to aggregate information without the biases that plague traditional forecasting methods, such as polls or expert analysis. ... sceptics point out that prediction markets are far from infallible. ... prediction-market supporters argue that even imperfect forecasts can be helpful. ... People have been betting on future events for as long as they have played sports and raced horses. But in the latter half of the nineteenth century, US efforts to set betting odds through marketplace supply and demand became centralized on Wall Street, where wealthy New York City businessmen and entertainers were using informal markets to bet on US elections as far back as 1868. ... Friedrich Hayek. He argued that markets in general could be viewed as mechanisms for collecting vast amounts of information held by individuals and synthesizing it into a useful data point — namely the price that people are willing to pay for goods or services.
If this election cycle is a mirror, then it is reflecting a society choked with fear. It's not just threats of terrorism, economic collapse, cyberwarfare and government corruption – each of which some 70 percent of our citizenry is afraid of, according to the Chapman University Survey on American Fears. It's the stakes of the election itself, with Hillary Clinton at last month's debate conjuring images of an angry Donald Trump with his finger on the nuclear codes, while Trump warned "we're not going to have a country" if things don't change. ... Meanwhile, the electorate is commensurately terrified of its potential leaders. According to a September Associated Press poll, 56 percent of Americans said they'd be afraid if Trump won the election, while 43 percent said they'd be afraid if Clinton won – with 18 percent of respondents saying they're afraid of either candidate winning. ... Around the globe, household wealth, longevity and education are on the rise, while violent crime and extreme poverty are down. In the U.S., life expectancy is higher than ever, our air is the cleanest it's been in a decade, and despite a slight uptick last year, violent crime has been trending down since 1991. ... For mass media, insurance companies, Big Pharma, advocacy groups, lawyers, politicians and so many more, your fear is worth billions. And fortunately for them, your fear is also very easy to manipulate. We're wired to respond to it above everything else. If we miss an opportunity for abundance, life goes on; if we miss an important fear cue, it doesn't. ... in order to resist being manipulated by those who spread fear for personal, political and corporate gain, it's necessary to understand it.
Americans are bad at saving. In an annual survey by the Fed, almost half said they couldn’t come up with $400 in an emergency. The savings rate of the bottom 90 percent of American households hovers just above 1 percent. ... There are many theories for why Americans don’t save, from poverty to debt to conspicuous consumption. But the most enticing comes from behavioral economics: It’s easier not to. Inertia is strong, and putting money away requires overcoming what economists call present bias. ... The good news, according to behavioral economists, is that we can just as easily be tricked into overcoming that psychology with “nudges” that reframe incentives. Just post calorie counts next to unhealthy food, and people won’t order cheeseburgers. Or, make 401(k) plans opt-out, and more people will save money for retirement. Suddenly, with one oh-so-simple tweak, making bad decisions becomes the harder option. ... At every step of the way, the study ran into a web of competing incentives and pesky human flaws that hurt its goal of getting poor people to save money. ... The problem goes beyond a sheer lack of funds. The psychology of poverty is hard to overcome with a dainty nudge. ... the study’s preliminary results were muddy. They suggested that the nudge method did get some people to save more: Deposits increased when people got some kind of reminder. But they didn’t show whether one type of nudge worked better than any other (possibly because of teller error), and they provided no evidence that the savings accounts helped people build up money over time.
A dual education system that incorporates vocational training and classroom learning could provide young people with more options in their transition into the working world. We think that engaging employers in the design and delivery of apprenticeship frameworks is the key to preventing skill mismatches. ... Changing employers’ perceptions of youth and encouraging early engagement in schools could increase youth employability and information around career options. This could include work experience, career advice, mentoring, and youth-led social action. ... Reducing informal recruitment methods and use of qualifications as filters could reduce work barriers to engage with youth from low socio-economic backgrounds who may be at risk of anti-social behavior.
But a disastrous 2015—including the flubbed launch of a new camera—punctured that enthusiasm. Revenue for the first quarter of 2016 was down year over year, and a much-anticipated drone release was delayed. When Woodman arrives at the GoPro Games, the company’s stock is flirting with all-time lows, down almost 90% from its peak. ... It’s a ride that could make even the most seasoned extreme-sports enthusiast dizzy. Woodman takes a seat on an off-duty ski lift, the high Rocky Mountain sun behind him. And then he dives into his plan for reviving the company he loves. He says that a trio of new products being released this fall—including that delayed drone, called the Karma—will help win over a swarm of fresh consumers. New software will make video editing easier and content even more shareable. He is relentlessly optimistic. ... Woodman sees GoPro as a sort of mini Apple, a hardware company that is evolving into a software platform with social networking features. Its business model will even include monthly subscription fees alongside steady hardware upgrades.