Bet On Biden

post by deluks917 · 2020-10-17T22:03:19.144Z · LW · GW · 89 comments

Contents

  Contest Entrants Think Trump is Going to Lose
  edit: At this point if anyone is reading and can access international markets the 'safe' line is to buy both 'pop vote' and 'Biden'. Pop vote is safe so you can 'hedge' Biden bets with a safe +EV pop vote bet. This way you win money unless Dems lose the pop vote (extremely unlikely).
None
89 comments

At this point, for many tax situations, you cannot rationally believe both 'Nate Silver is credible' and 'I should not be betting on Biden'. If you have any trust in Nate you cannot think Biden is below ~80% to win. You can get 'Biden' for 65-66c on Predictit. Notably, there are several de facto copies of the same bet (Female VP, Dems win presidency). Even with fees, you are making a lot of stochastic money. Your capital will probably not be held up that long. 

If you are outside the USA you can plausibly get even better odds. There are many places you can get implied odds of 62-63%. This bet gets worse if you are paying tons of income tax and cannot offset losses. But this is a very good bet for lots of people.

Polling Averages

I edited in an image of the rolling polling averages so people can judge this for themselves.

Here is another good analysis of why we should be confident in Biden.

In general, I think Rationalists should be a lot 'louder' about their advice when they are sure. For many tax situations, this is a complete slam dunk. I really wish rationalists had been louder about similar advice in the past when I could benefit.

Contest Entrants Think Trump is Going to Lose

Of the 98 entries, only six said that the Democratic candidate was under 50c to win the presidency. In fact, the median predicted probability for the Democratic candidate (hereafter Biden, for brevity) among contest entrants was 87%; notably, the median probability given by the models out there is also 87% (though Nate Silver has yet to release his and based on his fights with G. Elliott Morris it’s probably not going to come in very high).

This confidence in Biden (he is “Likely” to win the presidency, in the parlance of verbal handicappers) isn’t shared by the markets. Both BetFair and PredictIt price Joe in the low 60s, suggesting that the presidency “Leans” Biden (the price ranges on PI depending on the market you’re looking at). Even Silver thinks that’s too low: “I don’t think people realize how dumb and sometimes even irrational the prices are at political betting markets as compared to almost every other type of market (which is not to say other markets are always rational, either).” and “Too low on Biden.”

Note: My claims are completely orthogonal to whether Biden should win. Rationalists, in general, have some faith in Nate Silver and similar analysis. This post is about the logical conclusion of that faith. Please do not discuss the merits of which candidate is better for the country.

 

edit: At this point if anyone is reading and can access international markets the 'safe' line is to buy both 'pop vote' and 'Biden'. Pop vote is safe so you can 'hedge' Biden bets with a safe +EV pop vote bet. This way you win money unless Dems lose the pop vote (extremely unlikely).

89 comments

Comments sorted by top scores.

comment by James_Miller · 2020-10-18T12:21:22.073Z · LW(p) · GW(p)

I have bought $400 worth of Trump No contracts on PredictIt which will pay off if Trump loses.  The price as of this writing is 61 cents for a contract that pays $1 if Trump loses.

comment by gbear605 · 2020-10-17T23:53:48.617Z · LW(p) · GW(p)

Notably, the 538 prediction doesn't include a number of outside factors, primarily around mail-in ballots and voter suppression. 538 has already talked about the problems with mail-in ballots being rejected, and there are also concerns about not having all of the ballots counted before the cut-off point where they have to finish counting. Republicans have also made it harder for Democrat-leaning bases to vote. These are factors that will hurt Biden more than Trump. All those links are to 538, and there are other articles on the site about those same issues. If you believe in 538's model, you should probably also believe in their articles that indicate that these outside factors will be important. If you don't believe in the articles, then why do you believe in their model?

Either way, this is not a clear case where the market is wrong.

Replies from: Pablo_Stafforini, liam-donovan-1
comment by Pablo (Pablo_Stafforini) · 2020-10-18T12:53:34.823Z · LW(p) · GW(p)

Only the first article in the comment is by Silver, on whose expertise the original poster is basing his recommendation. That article doesn't discuss mail-in ballots or voter suppression, and in fact his main point is that the time remaining until election day (almost three months when the article was written) combined with uncertainties due to Covid-19 meant that the race was still open back then. Those considerations have much more limited force at present, when only 16 days remain, and Biden's lead has widened considerably. 

If you've been at all listening to Silver recently, you'll know that he thinks his model probably underestimates Biden's chances. This shouldn't be surprising, since as Silver acknowledges, in this new version of the model he has made a special effort to build conservative assumptions into it.

In any case, I would encourage people hesitant to bet for Biden to resist the temptation of "throwing in a bunch of considerations" for why the models may be wrong, and instead try to calculate what the correct forecast should be in light of those considerations. For example, if you think mail-in ballots will be a big factor, try to estimate the magnitude of this effect.

Following my own advice, I just built a simple Guesstimate model of the impact of mail voting on the popular vote. I created the model very quickly, so if anyone spots any errors, please mention them below. And if you think some of the parameters should be different, simply copy the model and adjust those parameters to your satisfaction. Note that the effect of "rejected" in-person ballots is not modeled. This effect favors Biden, since a greater proportion of Trump votes will be in person, and hence susceptible to being "rejected" (i.e., not cast due to failure to bring an ID, long lines, inability to find a polling station, etc).

ETA: The upshot of the model is that mail voting shrinks the expect popular vote gap between Biden and Trump by about 2%. If we assume that the electoral college gives Trump a ~2% popular vote advantage, the model implies a drop in Biden's chances of winning the election from 87% to about 79%. [I modified the model and improved some of the estimates, and now the effect is less than 1%.]

(Disclosure: I have bet a total of USD 12k on Biden, mostly back when his odds where roughly equal with Trump's.)

Replies from: liam-donovan-1, BossSleepy
comment by Liam Donovan (liam-donovan-1) · 2020-10-18T23:33:55.253Z · LW(p) · GW(p)

This model seems reasonable, but I think bettors should mostly ignore the possibility of rejected mail in ballots, because the effect is extremely uncertain and around the same magnitude as many other idiosyncratic factors that should mostly wash out. For example, if there's severe weather or an outbreak of COVID on election day in a crucial swing state, that will hurt Trump much more than Biden because a much greater proportion of his voters are voting by mail (essentially the "rejected in person ballots" effect you mention). 

comment by Randomized, Controlled (BossSleepy) · 2020-10-18T15:28:40.581Z · LW(p) · GW(p)

The 538 distribution currently has Biden falling between... <squints> ~255 - 440 electoral votes 80% of the time (47% - 82%). Updating your guesstimate sheet with those ranges give a mean proportion to Trump of .38 with a range of .17 - 0.54

comment by Liam Donovan (liam-donovan-1) · 2020-10-18T23:22:11.314Z · LW(p) · GW(p)

This is total misinformation; mail-in rejection will probably be cancelled out by increased turnout from low-propensity voters (it's much easier to vote by mail than to vote in person). In any case, the effect of a 1-3% rejection rate is minimal and indistinguishable from general noise/uncertainty. 

 

Most of the claimed "GOP voter suppresion" either has a minimal effect or hurts the GOP, because the nuts and bolts of election administration are implemented on a county level. In most states, urban counties have the resources and inclination to counter the voter suppression, while rural (predominantly GOP) counties do not. 

Replies from: gbear605
comment by gbear605 · 2020-10-18T23:31:12.520Z · LW(p) · GW(p)

I was merely noting that 538, the makers of the prediction model that the post is discussing, believes in the voter suppression. If you think they're wrong about the voter suppression, then you probably also shouldn't believe in their prediction model. On the other hand, if you think they're right about the prediction model, then why are you doubting their voter suppression research?

Of course, it's perfectly consistent to think that they are wrong about both the model and the voter suppression, but the post was assuming that you believed in the prediction model.

comment by Zvi · 2020-10-18T17:24:23.438Z · LW(p) · GW(p)

I'm debating to what extent to write a detailed explanation, but

 

(1) yes the odds are insane at this point, and I felt the need to note this in my weekly Covid post. Trump is not 0% but he sure isn't 38%. 

(2) the relative odds between the odds now, and the odds earlier in the year, are how you know the market is insane here. Nate's update from 71% to 87% reflects that Trump's position is obviously vastly worse than it was before, with less time to go, fewer opportunities for things to change, many votes in the bank and Biden several points farther ahead when the baseline was tightening. Yet the odds on Trump remain stubborn.

When I wrote my recent review of PredictIt prices, I thought Trump's odds were very generous but perhaps plausible. That's no longer the case. 

comment by PeterMcCluskey · 2020-10-18T03:01:02.141Z · LW(p) · GW(p)

If you have any trust in Nate you cannot think Biden is below ~80% to win.

That seems too strong. I'm assigning a 50% chance to Nate being the best authority on this, and a 50% chance to markets being the best authority. I still agree that betting on Biden has positive expected value.

My main reason for doubting Nate is the likelihood that the pandemic will have strange effects on turnout. I'm unwilling to bet on which direction that will surprise people.

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2020-10-18T23:27:17.982Z · LW(p) · GW(p)

For what it's worth, 538's final predictions have (narrowly) outperformed betting markets in 2008, 2012, 2016, and 2018 (I haven't looked at 2010 or 2014). Also, almost every consistently profitable politics bettor is putting massive bets on Biden this cycle, and my impression is that they either believe 538 is ~accurate or biased in favor of Trump. As an example, here's the twitter account of one of the best professional politics bettors around; he believes Biden has a ~96% chance of winning. 

Replies from: ShardPhoenix
comment by ShardPhoenix · 2020-10-20T06:18:51.765Z · LW(p) · GW(p)

There's a lot of partisan sneering against Trump supporters on that Twitter account which IMO calls his objectivity on the odds issue into question.

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2020-10-21T04:59:50.207Z · LW(p) · GW(p)

He's been a pro political bettor for years, so if he was betting based on biased odds he'd have gone broke a long time ago. It's just a fact that Trump is extremely overpriced, and his share price is being propped up by extremely -EV bettors; him using that as an excuse to attack Trump supporters doesn't undermine the quality of his analysis. 

comment by mad · 2020-11-06T05:53:18.241Z · LW(p) · GW(p)

Hey OP - 

Just want to say thank you for this post. This along with the failure of the rationalist community to buy bitcoin led to me betting $150 AUD on Biden, and Sportsbet Australia called the election for him already (no, I don't understand why either - I guess the publicity), so I got $235 in my bank account now (win: $85 AUD). 

I would not have done this without your post. 

https://www.9news.com.au/national/us-election-2020-sportsbet-pays-out-early-on-joe-biden-win/a722588b-85ec-4a87-a524-a1e592123691

comment by mabramov · 2020-11-04T21:13:27.224Z · LW(p) · GW(p)

I just made my account but I want to remind everyone that you cannot make inferences on how good your prediction (or how good of a bet this was) based on one data point (how this election turned out). If you want to dig deep into the odds that every state was given, you can start to make a case, but anyone with the gut reaction that since the election was close, this was a bad bet, are wrong.

Replies from: FCCC
comment by FCCC · 2020-11-13T01:09:24.582Z · LW(p) · GW(p)

Agreed. The best prediction would have been to assign Biden 100% credence. A defence of their position might say that "Given the information 538 had at the time, the best possible prediction machine would have less certainty than Nate", but this is too hard to prove, and it's inconsistent with the fact that Nate is a calibrated forecaster who (as far as I know) consistently beats the market.

comment by ShardPhoenix · 2020-10-17T22:33:32.868Z · LW(p) · GW(p)

In general I'm more inclined the trust the market value than any particular prognosticator. Why shouldn't I be?

edit: The arguments here have convinced me to bet some money on Biden (on Betfair), but today the odds are still moving against him (down to just under 60% on electionbettingodds.com). This does leave me rather confused - surely the "dumb money" can't outweigh the "smart money" so heavily? Especially not on Betfair which doesn't have PredictIt's limitations.

Replies from: tslarm, tslarm
comment by tslarm · 2020-10-17T23:40:33.974Z · LW(p) · GW(p)

Yeah, I think the OP's argument requires a good explanation of why the markets have failed to adequately price in Silver's prediction. I'm not saying markets are always right and impossible to beat no matter what, but the EMH is a pretty good default starting point, requiring strong evidence to overcome in any specific case. 'I trust this guy's public prediction, based on equally public information about his methods and track record' doesn't seem nearly enough.

Replies from: ratxt1, sil-ver, deluks917
comment by ratxt1 · 2020-10-18T01:27:23.683Z · LW(p) · GW(p)

The efficient market hypothesis is  an overrated and dubious hypothesis when applied to the stock market (a market which could plausibly have the necessary conditions for EMH to be reasonable), betting market's like predictit though are nothing like the stock market and significantly more inefficient. The necessary conditions for a market to be efficient require the market to be heavily/majority used by profit maximizing investors and this just isn't the case for most gambling markets. 

In general betting on a gambling market is a much worse idea than betting on stocks, since the transaction costs are a lot higher and you are betting on a zero-sum game instead of a historically positive-sum one. That being said there are some notable examples of the market completely failing. Take the Mayweather vs McGregor fight where the best boxer in the world for a decade only had a -400 edge against someone who had never had a professional boxing match (the line started at a much more reasonable -2500). If I had more money back in 2017 I would have bet that line heavily. Just because you are betting on a usually subpar market doesn't mean there aren't still good deals to be had on occasion.

Replies from: tslarm
comment by tslarm · 2020-10-18T05:36:30.267Z · LW(p) · GW(p)

My argument doesn't require the EMH to be true in any strong sense, just true enough that you can't beat a big, liquid market by a large margin via easy analysis of very public information. Predictit's price is similar to Betfair's -- in fact Betfair is currently slightly less favourable to Biden -- and presumably won't diverge too far in either direction due to arbitrage. Betfair has matched about $180 million on its 'next US President' market. Of course a lot of its users are wild gamblers, but it is big enough to attract serious professionals (and smart opportunists with plenty of capital) too.

comment by Rafael Harth (sil-ver) · 2020-10-18T07:49:39.601Z · LW(p) · GW(p)

I've been told that the election is considered a massive and rare opportunity among professional gamblers, which that person thought was the 'smart money'.

comment by deluks917 · 2020-10-18T02:28:09.024Z · LW(p) · GW(p)

Anyone who thinks that betting market prices are rational will not bet on them. Why would you tie up your capital (even for a few weeks) and pay fees if the prices are fair? 

Replies from: tslarm
comment by tslarm · 2020-10-18T05:50:44.942Z · LW(p) · GW(p)

Can you elaborate? I'm not sure what the point of disagreement is here.

For a big market like this, on an exchange like Betfair, my rough mental model is that there is a combination of recreational/compulsive gamblers, more serious professional/wannabe professional gamblers, and (given that the US election captures the attention of a great portion of the world) people who don't bet for a living but will keep an eye on the market and take any obviously profitable bets on offer.

So a lot of the bets that get matched will be between unserious players (who either don't care or don't think carefully about whether the price is rational) and serious players (who do). Others will be matched within the group of serious players, who of course can disagree with each other about the 'correct price'. But if there's a mispricing obvious enough that you or I can detect it just by reading 538 or Less Wrong, and large enough to be hugely +EV after transaction and opportunity costs, my default assumption is that it will probably self-correct before I get a chance to take advantage. Not all the money in the market is rational, but there are rational bettors with enough capital to keep the prices roughly where they should be.

edit to clarify why I'm focusing on Betfair: I don't know a lot about Predictit, but I believe it heavily limits the amount any individual user can bet. In isolation, that could be enough to allow it to stay surprisingly irrational for surprisingly long. But I assume its prices for any significant market will stay relatively close to those of a big exchange like Betfair, because of the easy arbitrage opportunities when they diverge. And the 65-66c you quote is very close to the Betfair price of about a day ago (though the latter has since tightened to the equivalent of about 62c).

Replies from: tslarm
comment by tslarm · 2020-10-19T04:18:09.672Z · LW(p) · GW(p)

At least a couple of people have downvoted this without replying. One of the things I usually like about LW and similar spaces is that good-faith comments get a reply, not just a silent dismissal.

I get that the comment is not exactly punchy or brilliantly written, but I was trying to do the right thing and explain some of my own assumptions, rather than write the equivalent of 'wat?' and leave deluks917 to do all the work of bridging our communication gap.

Replies from: deluks917
comment by deluks917 · 2020-10-19T05:48:32.565Z · LW(p) · GW(p)

https://www.lesswrong.com/posts/y8RWtNBiksbSzm9j4/bet-on-biden?commentId=ENYJswSZy2DgrntEh [LW(p) · GW(p)] seems like an ok guess. 

I have a much higher confidence in this being a good bet than in any particular theory of why people are betting on Trump.

comment by tslarm · 2020-10-19T04:24:30.482Z · LW(p) · GW(p)

The arguments here have convinced me to bet some money on Biden

Which ones convinced you? I still haven't seen a serious explanation for why everyone is apparently leaving so much expected value on the table. It seems to me that the market is big enough to be worth the attention of serious people, but not so big that it would take a huge number of them to snap up all the 'dumb money' and push the odds somewhere reasonable.

Replies from: ShardPhoenix
comment by ShardPhoenix · 2020-10-20T00:33:22.373Z · LW(p) · GW(p)

The main factors were Nate Silver's record of good calibration, and (alleged) "smart money" successful bettors (including local Zvi) being onto it. I'm still uncertain why the market could be so inefficient in this case, so I'm not betting a lot of money, but it's possible that institutional factors prevent large amounts of smart capital coming in - perhaps directly betting on the election is still too weird for a large investment firm. 

comment by MichaelStJules · 2020-10-24T17:05:30.697Z · LW(p) · GW(p)

Andrew Gelman, super legit (imo) statistician who built The Economist's model, criticizes 538's model for getting correlations wrong:

https://statmodeling.stat.columbia.edu/2020/10/24/reverse-engineering-the-problematic-tail-behavior-of-the-fivethirtyeight-presidential-election-forecast/

https://www.reddit.com/r/fivethirtyeight/comments/jh9bmu/andrew_gelman_reverseengineering_the_problematic/

The Economist's predictions are even more favourable to Biden, though:

https://projects.economist.com/us-2020-forecast/president

Replies from: MichaelStJules
comment by MichaelStJules · 2020-10-27T02:10:07.236Z · LW(p) · GW(p)

Older discussion of the Economist's model and betting markets by Gelman:

https://statmodeling.stat.columbia.edu/2020/06/19/forecast-betting-odds/

comment by ChristianKl · 2020-10-21T11:35:14.014Z · LW(p) · GW(p)

For whom is betting for Biden actually a good idea? Can non-US citizens effectively participate? What when you factor in transaction costs? What are my expected gains (are they high enough to register an account and go through the hassle)?

comment by Unnamed · 2020-10-18T03:08:21.069Z · LW(p) · GW(p)

Do you have an estimate of expected profit per $100 bet (for a few of the most plausible scenarios)?

My impression is that PredictIt is +EV is you make lots of not-too-correlated bets so that your losses can offset your wins (though maybe not by enough to be worth the time & effort), but it's generally -EV (or at best barely +EV) if you deposit to make a one-off bet where you have to pay fees & taxes on your winnings (and don't get any tax benefit from your losses).

Related: Limits of Current US Prediction Markets (PredictIt Case Study) [LW · GW]

Replies from: deluks917
comment by deluks917 · 2020-10-18T05:36:15.970Z · LW(p) · GW(p)

I would say Biden is conservatively 80% to win from here. Polls are incredibly good. The election is in sixteen days. When I made the thread you could get Biden for 0.65. 

You need to pay 3.5 cents tax on winnings if you buy at 0.65. There is also a 5% withdrawal tax. So if you win you get (100/0.65)(0.965)(0.95)(0.8) = 112.8 . 12.8% returns in 16 days is nothing to laugh at. You are still getting almost 6% expected returns if you think Biden is only 75% to win. This all assumes you immediately withdraw your winnings from Predictit which is obviously bad for your expected value. 

If you are not in the US you can both get better odds than 0.65 and you don't have to pay the insane rake. 

Replies from: Unnamed
comment by Unnamed · 2020-10-18T08:07:02.049Z · LW(p) · GW(p)

It looks like this includes the fees you pay to PredictIt, but not the taxes you pay to the government.

Replies from: deluks917
comment by deluks917 · 2020-10-18T16:43:36.103Z · LW(p) · GW(p)

Yes. I was clear in the OP Predictit is a worse deal depending on your tax situation.  If you cannot deduct losses things look much worse. But many people either have low incomes or already deduct.

Betting on international sites should be profitable regardless of tax status since the returns are much better.

comment by Rafael Harth (sil-ver) · 2020-10-18T07:50:34.671Z · LW(p) · GW(p)

Is there anything a person living in Germany can do other than place a bet via someone else?

Replies from: deluks917, Morpheus, Radamantis
comment by deluks917 · 2020-10-18T23:52:37.399Z · LW(p) · GW(p)

Bet 100% of your upcoming charitable donations. Even if you are loss averse the charities are not. Donate the winnings if the bet pays off. 

comment by Morpheus · 2020-10-18T22:06:30.150Z · LW(p) · GW(p)

You could try using Augur using a VPN I think. Though you need Cryptocurrency (Etherum). Which is the reason I didn't use it so far (too much effort to set up).

Replies from: Morpheus, Morpheus
comment by Morpheus · 2020-10-19T07:59:29.940Z · LW(p) · GW(p)

Ok so I am through the process of making an account and adding funds to it. You have to transfer your money into the Cryptocurrency DAI. The bet with the lowest fees and the longest expiration date (to allow for a longer time until the results are known), has Trump at 62%. The cheapest NO-share that you can buy immediately is at .69. There is a 0.77% market fee. But there is a relatively high fee for making a transaction which is payed in Ethereum. it currently costs the equivalent of around 10$. But this transaction doesn't scale with your bet, so if you already plan to make a large bet (>500$) this shouldn't affect your decision much.

Replies from: sil-ver, Morpheus
comment by Rafael Harth (sil-ver) · 2020-10-20T16:29:53.378Z · LW(p) · GW(p)

I went the crypto route a bit, but then decided to funnel it through an acquaintance and use predictit instead.

If I understand everything correctly and calculated all the fees properly (probably haven't), then the overall deal from the point where money leaves my paypal to the point where hopefully more comes back, is analogous to betting on Biden as if he had a 73,6% on the markets. Which I guess is still pretty good, but man do I wish that there was just one large market with minimal fees, instead of fees on transferring, currency conversion, profit on predictit, and withdrawal from predictit. So many fees :x

Also, it takes a few more days. I hope the markets don't shift in Biden's favor in the meantime (then the deal obviously gets worse). It's amusing how I now want them to move into the opposite direction.

And all that is assuming a 0% risk that the person just screws me over and keeps the money for themselves, which is probably roughly accurate.

Replies from: Pablo_Stafforini
comment by Pablo (Pablo_Stafforini) · 2020-10-20T17:03:23.478Z · LW(p) · GW(p)

man do I wish that there was just one large market with minimal fees

Such a market exists, though unfortunately it is restricted to countries where most LW users are not citizens of.

comment by Morpheus · 2021-05-07T20:07:17.301Z · LW(p) · GW(p)

Turns out I had been too optimistic with this. I did not realize at the time that I would also have to pay transaction fees for claiming my money later. I also procrastinated on getting my money back for a long while, because I needed to add more funds to my account in order to pay for the transaction costs. In the end I payed another ~150$ in gas fees.

comment by Morpheus · 2020-10-18T22:49:56.631Z · LW(p) · GW(p)

Ok you don't need Etherum. You can just buy Augur's currency using a credit card. I tried using coinbase, but it seems to have pretty high exchange fees.

comment by NunoSempere (Radamantis) · 2020-10-18T08:08:22.798Z · LW(p) · GW(p)

Betfair.de should work. Besides sports, there is a politics section. 

Replies from: sil-ver
comment by Rafael Harth (sil-ver) · 2020-10-18T12:12:00.629Z · LW(p) · GW(p)

Sadly, while you can place sport bets from Germany via Betfair, you can't access political bets.

comment by NunoSempere (Radamantis) · 2020-10-18T08:19:19.619Z · LW(p) · GW(p)

I concur with this. In my case, I set aside some amount of money I was comfortable losing, calculated the Kelly bet based on the expected win, and bet some amount on Biden. I used Betfair, which is available to Europeans.

Some commenters mention the EMH. As counterevidence, I present that Betfair is offering even odds that Biden will win at least one state Trump won last time. (The 538 model gives 96% to this) (This was wrong)

comment by waveman · 2020-11-04T08:26:56.217Z · LW(p) · GW(p)

I got heavily downvoted for suggesting that Nate Silver's credibility was not strong enough to make this a good bet.

The most you could say at this point (late in the night on election day) is that it looks like the election is very close. This suggests to me that those people saying that betting on it at 65% odds for Biden was a huge steal, were overconfident. People were quoted who thought Biden's P(win) was 96%. 

I am interested in any suggestions about what went wrong. I can't think of a lot of edifying reasons. 

1. Rationalists don't win

2. Dunning-Kruger effect

3. General overconfidence

4. Saying Trump had a chance runs the risk of signaling that you are a "Trumptard".

5. Stating high confidence is one way to signal high intelligence. "Uh I'm not sure" doesn't sound too smart. 




 

Replies from: deluks917, habryka4, andrea-mulazzani, FCCC, sil-ver
comment by deluks917 · 2020-11-04T09:18:57.938Z · LW(p) · GW(p)

We are in a scenario Nate Silver explicitly described:

But what’s tricky about this race is that — because of Trump’s Electoral College advantage, which he largely carries over from 2016 — it wouldn’t take that big of a polling error in Trump’s favor to make the election interesting. Importantly, interesting isn’t the same thing as a likely Trump win; instead, the probable result of a 2016-style polling error would be a Biden victory but one that took some time to resolve and which could imperil Democrats’ chances of taking over the Senate. On the flip side, it wouldn’t take much of a polling error in Biden’s favor to turn 2020 into a historic landslide against Trump.

As of writing this comment Biden has several paths to victory and is heavily favored to hit at least one. I think he is about 75% to win at this point, despite all the bad news. We are in a world where Biden might win despite losing all of PA FL OH NC. Very little had to go right for Biden to win. Neither myself nor Nate Silver made any statements saying the election would definitely be a landslide. I told people to bet on Biden to win not to bet on Biden winning in a landslide. I will say there were some people pushing more aggressive Bets (Rainbow Jeremy comes to mind) and we should definitely update against their point of view. But Nate remains credible.

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2020-12-07T06:10:32.805Z · LW(p) · GW(p)

FWIW I'm 99% sure RJ made money from this election, and I'm 50% sure he made over 90k. Why would you update against someone who has consistently made enormous amounts of money betting on his beliefs?

 

Edit: looks like I was a bit overoptimistic about his profits but he supposedly did make a decent amount

https://twitter.com/rainbow_jeremy_/status/1336815220061327363

(keep in mind he lies all the time so this is only noisy evidence)

Replies from: deluks917
comment by deluks917 · 2021-02-19T02:55:33.064Z · LW(p) · GW(p)

Many people including myself got way better percentage and absolute returns on the election. He was way too optimistic.

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2021-02-20T03:51:29.233Z · LW(p) · GW(p)

But he's been a professional politics gambler for years now, which seems like much stronger evidence for evaluating his calibration than the results of one election cycle?

Replies from: deluks917
comment by deluks917 · 2021-02-20T22:03:51.453Z · LW(p) · GW(p)

That does not seem like very strong evidence his bets on the 2020 election were good.  He did better than people who refused to bet at all. But he did worse than people who just bet on Biden. Many people figured out the Biden bet in the poker and gambling communities. You should certainly downgrade your opinion of RJ relative to people who did a lot better.

comment by habryka (habryka4) · 2020-11-04T17:52:36.441Z · LW(p) · GW(p)

People were quoted who thought Biden's P(win) was 96%.

Please provide actual quotes. I don’t know anyone who held that belief. Not even Nate Silver held that belief if you take into account election shenanigans. Nobody in the thread mentioned anything close to that probability. Most expressed probabilities I’ve found by rationalists are something in the 70-80% range for Biden, which at this point still doesn’t strike me as unreasonable.

comment by Emiya (andrea-mulazzani) · 2020-11-04T09:57:45.121Z · LW(p) · GW(p)

Aren't most of Biden votes on mail votes, which are counted later? 

From what I'm seeing this still doesn't tell us that we aren't in a "Biden wins without a huge margin", which was the largest chunk of those 80%/90% estimates. I expected waking up at this time and seeing that the votes were momentarily favouring Trump (in fact I had to order my brain to expect and prepare for that).

"Biden wins" hypothesis has narrowed without those "Biden wins by a large chunk" scenarios being likely anymore, but in the "Biden wins" hypothesis I wouldn't have called seeing that unlikely. 

So far there's not so much "Trump wins" evidence I'd assume something was wrong with the prior odds, I'd think that if the remaining votes would be expected to be evenly distributed, but they are not.

 

My estimate 2 days ago was Biden at 85% to win, because a lot of things had to go in a very specific way for it to not happen or there had to be an error without any precedent in the polls. I felt like I was supposed to go at least 90%, but couldn't bring myself to do that because I felt overconfident in doing so, even if I was pretty sure my estimate was erring in the opposite side.

 

I think that a lot of rationalists assumed that the most common odds they were hearing (80% or so) had been too cautious because pollsters were afraid to make the same wrong call they made last time, so they augmented the odds a bit. What convinced me to go from 80% to 85% was seeing that Biden lead was three time the lead Hillary had, so that kind of fluke was really unlikely. 

If rationalists had been overconfident I'd expect this correction from pollsters excessive under confidence played a large part on anyone who wasn't just calculating odds on sheer polls data.

 

If Trump somehow wins... I think we'd have either witnessed something previously unknown that made the polls a lot less reliable (this seems to be a very particular election for lots of factors), which usually doesn't happens so betting on Biden then at those odds was still the intelligent thing to do, since you'd make money most times you did that, or that we simply got the unlikely result with things going in a specific way. 

 

But I can't think of anything rationalists should have done differently.

comment by FCCC · 2020-11-06T03:07:11.976Z · LW(p) · GW(p)

Here's what would make me question Nate's credibility: If we look at the 538's former projections and compare them to the betting markets prior to election, make Kelly bets, and lose money.[1] Note that 538 can be on the wrong side of the market some of the time and still be profitable.

Saying Nate lacks enough credibility when he is well calibrated and on the right side of the market doesn't make any sense and seems like an extreme case of hindsight bias. For example, you use the 2016 election to undermine 538's credibility, but (if I recall correctly) 538's forecast gave Trump a greater chance than the market's odds implied, so if you bet based on 538's forecast you would have bet on Trump and made money. I could be remembering wrong, so if someone links this data, they'd get an upvote from me.


  1. Looking at all orderings of elections ↩︎

Replies from: Pablo_Stafforini
comment by Pablo (Pablo_Stafforini) · 2020-11-08T17:28:10.040Z · LW(p) · GW(p)

I'm too lazy to look it up, but I did research this a couple of weeks ago and found that 538 had indeed outperformed the markets both in 2008 and 2016 (I wasn't able to find data for 2012). This is not very informative, though, since it's just a couple of cases. Much better is to look at the state-level predictions and use brier scores as a measure of forecasting performance.

Replies from: alex-k-chen, FCCC
comment by Alex K. Chen (alex-k-chen) · 2020-11-09T10:16:35.229Z · LW(p) · GW(p)

538 totally outperformed in 2012 on intrade - it seems like there were whales pushing up the romney price on intrade.

comment by FCCC · 2020-11-09T05:19:46.577Z · LW(p) · GW(p)

And this year too. I agree about the small sample size if we're just asking "Who will be president?" We should use every one of 538's predictions that could have been used to make a bet in a liquid betting market.

If a profitable set of Kelly/Markowitz bets (under all election orderings) has a worse Brier score than the market's Brier score, I'd be more interested in the profit of the bets, since we're talking about betting money.

comment by Rafael Harth (sil-ver) · 2020-11-04T09:56:25.951Z · LW(p) · GW(p)

Here are the results we currently have put into 538's interactive map. I've been strictly kind to Trump, meaning I've put him as winning some races that aren't yet called, while only giving Biden races that have been called.

538 thinks this comes out at ~86/7/7 Biden/Trump/Tie (these are simulations and the numbers seem to fluctuate). And I believe Nebraska's second district is also won by Biden (I'm confused about that one, can't find an official source), in which case all the ties to go Biden.

I'm not convinced this looks bad for Nate Silver. We seem to be in the pessimistic half of the distribution (from Biden's pov), but not that far. It's too early to be sure, but there seems to have been a massive polling error in Florida, and some smaller errors in other swing states in Trump's favor. Again, that's worse for Biden than the median outcome, but not crazy worse.

comment by MichaelStJules · 2020-11-02T20:26:33.343Z · LW(p) · GW(p)

From the blog of Andrew Gelman, one of the authors of the Economist's model:

As noted above, I think that with wider central intervals and wider tails we could lower that Biden win probability from 96% to 90% or maybe 80%. But, given what the polls say now, to get it much lower than that you’d need a directional shift, something asymmetrical, whether it comes from the possibility of vote suppression, or turnout, or problems with survey responses, or differential nonresponse not captured by partisanship adjustment, or something else I’m forgetting right now. But I don’t think it would be enough just to say that anything can happen. “Anything can happen” starting with Biden at 54% will lead to a high Biden win probability now matter how you slice it. For example, suppose you start with a Biden forecast at 54% and give a standard error of 3 percentage points, which has gotta be too much—it yields a 95% interval of [0.48, 0.60] for his two-party vote share, and nobody thinks he’s gonna get 48% or 60%. Anyway, start with that and Biden still has a 78% chance of winning (or 75% using the t_3 distribution). To get that probability down below 80%, you’re gonna need to shift the mean estimate, which implies some directional information.

comment by philip_b (crabman) · 2020-10-24T15:09:43.976Z · LW(p) · GW(p)

Is there a simple guide on how to bet on Biden if I already have Ethereum and I don't live in the US? It seems I can do it on Augur and FTX, but both platforms seem very complicated.

Replies from: Morpheus
comment by Morpheus · 2020-10-26T14:51:59.793Z · LW(p) · GW(p)

You can use catnip which is built on Augur. Here is a blogpost from the guy who made it and a Discord Channel where you can ask questions when you get stuck.      

comment by rockthecasbah · 2020-10-20T18:23:34.921Z · LW(p) · GW(p)

Practical question: Say I were willing to break the law. Is there an easy way to bet on BetFair from the US?

Replies from: deluks917
comment by deluks917 · 2020-10-20T18:28:27.911Z · LW(p) · GW(p)

I do not know of any safe to do this. If you are found out you risk losing money if they freeze your account. This bet looks a lot worse if you are risking your account when you get found out. If you have outside friends who trust you maybe they will 'bet for you'. 

There are some offshore sites taking American bets. You can also place bets online legally if you are in NJ (I think).

comment by deluks917 · 2020-10-19T01:53:09.295Z · LW(p) · GW(p)

If you have BTC lying around and trust mybookie you can get 1K free if you wager enough. Getting 1K free on top of 10K is a lot of value. The site is a lot worse without BTC.

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2020-10-19T03:20:35.198Z · LW(p) · GW(p)

again, watch out for rollover requirements before taking signup bonuses! Unless you're a prolific sports bettor it's almost certainly a bad idea to take the bonus. 

comment by Liam Donovan (liam-donovan-1) · 2020-10-18T23:37:50.077Z · LW(p) · GW(p)

Anyone with available capital interested in making money from this election should spend ~1hr researching TX, come to the accurate conclusion that Biden is favored there, and bet accordingly (buy Biden in TX, Dems to win TX senate race, Biden electoral college margin >210 EC votes, etc). The expected returns are much higher than betting on Biden to win overall, because Biden TX is currently trading at around 30% to win TX, when fair value is ~65%.  These twitter feeds from (semi)pro politics bettors are a good place to start: 1, 2

The key argument is that polling systematically underestimates Democrats with Latino voters in Texas, and that the electorate will be much more favorable to Democrats than in 2018, when Dems lost the Senate race by ~2.5 points in a worse national environment. 

Replies from: deluks917, RyanCarey
comment by deluks917 · 2020-10-23T20:58:30.007Z · LW(p) · GW(p)

I spent some time. I do not see the smoking gun. Can you post more details or links?

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2020-10-24T18:47:37.286Z · LW(p) · GW(p)
  • Polling shows Biden and Trump very close in the state
  • polling in Texas systematically underestimates Dems with Latinos
  • Turnout in TX seems to be much higher than past years, which is great for Dems because people who didn't vote in 2016/2018 are disproportionately young/nonwhite
  • Dems nearly won in 2018 despite depressed Latino turnout 
Replies from: MichaelStJules, MichaelStJules
comment by MichaelStJules · 2020-10-25T04:08:24.339Z · LW(p) · GW(p)

Do you think FiveThirtyEight and the Economist haven't appropriately accounted for these considerations in their models? I don't think the discrepancy with the markets are so large. Where did ~65% come from?

Replies from: liam-donovan-1, jorge-velez
comment by Liam Donovan (liam-donovan-1) · 2020-10-25T22:55:59.031Z · LW(p) · GW(p)

Neither model takes into account any of these factors, and indeed their discrepancy with the markets are much smaller. 

65% just comes from my estimate of the fair value of a TX biden contract, which comes from...whatever internal process generates probabilistic credences. 

comment by Annapurna (jorge-velez) · 2020-10-25T12:18:42.357Z · LW(p) · GW(p)

Yeah the +EV of this bet is marginal at best. 

comment by MichaelStJules · 2020-10-24T20:25:00.575Z · LW(p) · GW(p)

Are there any important considerations in the opposite direction?

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2020-10-24T22:47:32.064Z · LW(p) · GW(p)

There's plausible arguments for Trump being favored (he is currently ahead in the polls, after all), but I can't think of any good arguments for him being at  ~75c. 

EDIT: Trump and Biden are now tied in the 538 TX polling average

comment by RyanCarey · 2020-10-27T08:47:06.392Z · LW(p) · GW(p)

The Texas bet (TX) seems EV neutral to me, and clearly far worse than the nationwide electoral college (EC) bet.

Biden for EC: 95% likely (The Economist model), priced at 62%

Biden for TX: 26% likely (The Economist), priced at 29%

The two Twitter feeds are full of a lot of shitposting, and don't update me much.

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2020-10-27T20:27:01.960Z · LW(p) · GW(p)

I mean yes, clearly if you believe the Economist and 538 models are reasonable, then the TX bet isn't +EV. My point is that the models are clearly unreasonable for the reasons listed above, and the bet is actually extremely +EV. 

Replies from: RyanCarey
comment by RyanCarey · 2020-10-28T11:52:14.068Z · LW(p) · GW(p)

There are three arguments (1) polls underestimating Dems in Southern states, and (2) benchmarking against 2018 senate, and (3) some low-quality Tweets.

It's weird to hold a lot of stock in (2), given noise from candidate selection and other variables.

If you place a lot of weight on (1), the actually sane bet would be Biden in AZ. It's rated 2nd and 4th most likely to go dem by Cohn and Wasserman respectively.

Biden for AZ: 77% likely (Economist), priced at 54% on Election Betting Odds.

comment by Stuart Anderson (stuart-anderson) · 2020-10-18T02:09:40.402Z · LW(p) · GW(p)

-

Replies from: deluks917
comment by deluks917 · 2020-10-18T02:25:08.105Z · LW(p) · GW(p)

I would encourage you to bet on other things too if you think you have a big edge. It is not obvious to me there are any better bets available at this moment. 

538 had reasonable odds in 2016 imo. 27% chances happen. 

Bookies/Sites offer odds based on how much money is on both sides. 

comment by Dagon · 2020-10-18T14:28:12.692Z · LW(p) · GW(p)

I'm not a fan of investment advice on LessWrong.  If these markets are significant (they aren't - there's just not that much money changing hands, and the fees and terms make it unattractive to pro bettors), there's something to explain, before advising to exploit.    

I think you're well off the mark when you claim that "rationalists ... have faith".  

Replies from: liam-donovan-1, deluks917
comment by Liam Donovan (liam-donovan-1) · 2020-10-18T23:54:29.576Z · LW(p) · GW(p)

This is extremely false; I know of multiple professional political bettors, and plenty more who make 5+ figures betting on election years. Also, PredictIt has $113m matched on the "Who will be the next president?" market alone, which is a lot of money by any reasonable standard... 

 

The explanation for the mispricing is really simple: Trump supporters tend to think that the polls are rigged and he'll win, and Biden supporters tend to think the polls are off/Trump will rig the election/voter suppression will cost them the election/ etc etc so 90% of the square money is on Trump and there's not enough sharp money to balance it out. Elections are just too infrequent for biased bettors to lose money quickly enough that prices are efficient, and it doesn't help that Trump unexpectedly won the 2016 election, transferring a lot of money to biased bettors. 

Replies from: tslarm, Roko, Dagon
comment by tslarm · 2020-10-19T04:33:23.839Z · LW(p) · GW(p)

If it's that obvious, though, why does it persist? Elections might not be frequent enough to bankrupt the sources of dumb money, but why have the pros not eaten it up by now? Even if there aren't that many of them, and despite their skills they're not very rich yet, why haven't the people who do have enough capital to bring the markets back to their senses got involved?

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2020-10-19T06:00:03.447Z · LW(p) · GW(p)

That's a good question; I assume it's because they don't have enough domain expertise to make a confident judgement about the market, and they have more valuable things to do with their time than acquire that expertise. 

comment by Roko · 2020-10-24T16:33:46.943Z · LW(p) · GW(p)

it doesn't help that Trump unexpectedly won the 2016 election, transferring a lot of money to biased bettors.

I mean they got the answer right so it seems a little arrogant to call them biased. Maybe they just had a good heuristic to do with preference falsification?

Replies from: liam-donovan-1
comment by Liam Donovan (liam-donovan-1) · 2020-10-24T18:45:20.986Z · LW(p) · GW(p)

Prices have been biased towards the GOP ever since 2016, and I'm pretty sure it's because most of the Trump bettors in 2016 were GOP partisans rather than sophisticated analysts. "Maybe they just had a good heuristic to do with preference falsification?" what does this mean? 

comment by Dagon · 2020-10-19T03:49:26.470Z · LW(p) · GW(p)

Thanks for the data!

I do know a number of professional bettors (poker and sports/horse, not political), who are only lightly betting on the political sites - the terms and vig are very unattractive to them.  

I stand corrected if there's $113M on that specific bet, though - that's enough (presuming it's fairly active, not all placed months ago and just forced to resolve rather than hedging/adjusting) to indicate pretty broad belief.   That does change it from "small-stakes very likely exploitable" to "reasonable stakes, but one should answer WHY there's a discrepancy before committing very much".  

comment by deluks917 · 2020-10-18T21:43:10.148Z · LW(p) · GW(p)

Have you actually tried checking with anyone resembling a 'pro bettor'? I predict the majority of them would say the bet is in fact attractive and you should put money on Biden. I see one person in the thread who is known for regularly making money betting on things other than stocks (Zvi). He said 'yes the odds are insane at this point'. 

Terms are actually better right now outside of Predictit but Americans cannot legally use those. I have not look into all the options for getting millions into the markets (I do not have that kind of money). But you can certainly bet hundreds of thousands of USD easily if you are not American. This seems more than sufficient to be attractive to pro bettors. The things you list in parenthesis do not explain the current situation. 

comment by waveman · 2020-10-19T06:25:34.930Z · LW(p) · GW(p)

'Nate Silver is credible'

 

He had Trump at 28% chance to win, so while credible he is not 100% accurate. Let's say Trump actually had a 50% chance of winning last time, which is not outlandish seeing that he won the electoral college by a significant margin, so NS was off by ~22+%.

Now he says Trump is 87% likely to lose. Take off 22% and it's 65%. After costs, taxes, operational slip-ups, your time etc, and you have an expected loss at 60-65% odds. 

Also, if Trump wins and you are a Biden supporter, you lose twice. That would be bad hedonics. On the other hand if you prefer Trump this could be a form of hedging.

Not only that there is time to the election during which a lot can happen. "A week is a long time in politics", So even if you are right at the moment, you are exposed to events leading up to the election, which could make you wrong.

For the record I think Biden has about 70% chance to win, so if you take this bet you will probably win. Still a bad bet though IMHO. 

Source: I have made a large fraction of all possible investing mistakes. In betting markets I am ahead, having only ever bet on one horse race, in which my horse came in first. 

Replies from: FCCC, deluks917
comment by FCCC · 2020-10-19T08:22:10.260Z · LW(p) · GW(p)

Let's say Trump actually had a 50% chance of winning last time

What do you mean by this? That human behaviour is non-deterministic? Or that, given the publicly available information at the time, the best guess was 50 percent? If the latter, it's easy to get a better credence after the event happened. Look at Nate's track record. An event that he gives an percent chance happens pretty damn close to percent of the time. You could've just as easily said he underestimates the winners when he got it "right" (i.e. he said > 50 percent chance), and therefore Biden has an even higher chance of winning.

Replies from: waveman
comment by waveman · 2020-11-04T08:07:09.744Z · LW(p) · GW(p)

> What do you mean by this?


 I mean that given he won, the actual odds of him winning were actually better than 10%. 

I cannot prove this externally but  - before the election in 2016 I said to several people, who remember this, that it would be somewhere between a narrow Clinton win and a strong Trump win. So it was not outlandish to think Trump could win. The main reason I had was what is now known as the "shy Trump voter" effect. People did not want to get cancelled for admitting that they were a 'fascist'.  

> Look at Nate's track record

If Trump wins this one, as looks fairly likely at the moment, NS will be 3/5 for Presidential elections, no better than chance.

My main beef with the argument from credibility is a) NS does not have a long strong track record in this field of presidential elections, b) Credible is different than totally accurate. I pointed out if he was wrong by a few tens of percents, like last time, his view is not strong evidence that there is a winning bet here. 

Funnily enough NS reduced his P(Biden) to about 50% on election day (or maybe the day before). 

comment by deluks917 · 2020-10-19T07:49:13.860Z · LW(p) · GW(p)

Depends on where you bet. If you are in the right country you can make a lot of money if Biden is 70% to win. I emphasized predictit because I believe most people on lesswrong are in the USA.