On The Necessity Of Subjecting Kremlinologists (And Social Scientists) To Market Discipline

I have gone on record with the following odds on Russia’s next President: Medvedev – 70%, Putin – 25%, Other – 5%. The first betting site to offer odds on the Russian Presidential election has other ideas. As of June 2011, the British online gambling site Stan James is offering the following odds: Putin 4/7, Medvedev 11/8, Zyuganov 66/1, Zhirinovsky 80/1, Bogdanov 100/1*.

Converted into non-gambler terminology, this means that they view VVP as the clear favorite. Whereas a $100 investment into Putin will yield just $56, betting right on a second Medvedev Presidency will net you $138. All the other candidates are (rightly) considered to be insignificant fry – e.g., correctly betting $1 on a Zyuganov win will get you $66 (with the additional EV-lowering risk that it may be promptly confiscated as a product of speculation if you’re in Russia))). Or from the viewpoint of implied odds, you need to have >63.64% confidence that Putin will win OR >42.11% confidence that Medvedev will win to profitably bet on the respective candidates**. So if I had the opportunity I’d totally bet on DAM, but unfortunately that site is closed to US-based political gamblers.

Bookies structure their odds in such a way that they win most of the time; note that the total implied odds add up to nearly 110%. But you can still win despite the handicap, by having special insight or knowledge of the topic. Needless to say, most “Russia watchers” will no doubt claim they have those, at least implicitly (otherwise, what right do they have to their editorials, salaries, etc?). I have previously exposed the self-appointed Kremlinogist priesthood for being full of cranks hiding their fundamental ignorance behind credentials, citations, post hoc narratives, etc. Here is their chance to prove me wrong, all ye Leon Arons and Ariel Cohens and Loco Lucases of the world! And get fabulously rich into the bargain!!!

All social (so-called) scientists should be subjected to this “trial by casino.” As the price of holding publicly funded positions, economists should be forced into investing their money into their own predictions of GDP growth or unemployment; political scientists should use their unique insights to bet on political candidates, parties, and revolutions; etc. Think of this as an idea for an institutional safeguard against fraud, an antidote to the snake oil and two-bit experts polluting economic, social, and political discussions. Because when these “experts” fail, they experience no accountability – largely, by conjuring explanations for why they were wrong, or sweeping their old claims under the carpet altogether – while the common folks who pay for their sated and comfortable upkeep suffer the repercussions of their failed predictions. By subjecting the “experts” to the market discipline of the casino, the quacks will be exposed and bankrupted in a Darwinian struggle for (reputational, pecuniary, etc) survival, and thus cleaning up social sciences and benefiting productive society.

But for now I’ll limit this challenge to Kremlinologists, an especially odious, malign and mendacious strain even by social “science” standards. Come on, bet some of that money you leech off your readers and/or taxpayers. If you don’t, like the pathetic quackacademic you probably are, then consider yourself lower than the meanest bookie on the planet. He at least puts his money where his mouth is.

UPDATE 6/11: Two further things I want to mention. Patrick Armstrong kindly pointed me to this site, which is based on punters’ estimates (as opposed to bookies). There, as of today, the traded odds are that there is a 75% chance that Vladimir Putin will “announce he intends to run for Pres. of Russia before midnight ET 31 Aug 2011.” So betting here – i.e. selling shares – is even more profitable. Not only does it cut out the bookie and get one even better odds that from Stan James above, but that prediction also flies against the Kremlin tradition of announcing their candidate within a half-year of the elections (Yeltsin announced Putin as his preferred successor on Jan 1st, 2000; Putin did the same for Medvedev on Dec 10th, 2008).

Why on Earth could the odds be so tilted? First, this trade isn’t enjoying a lot of volume so lots of potential for skew. Second, the Western media coverage, which focuses on how DAM is a puppet of VVP and on how the master wants his old job back to reassert dictatorship or some such. As with the Russian stock market in the past decade, it offers an excellent opportunity, paraphrasing Eric Kraus, to profit off the difference between the media’s perceptions of Russia and reality.

PS. Speaking of prior elections… I noted that Sean Guillory posted about the Presidential odds in August 2007. Back then, the bookie consensus was that Sergey Ivanov – presumably because of his silovik background – was the favored successor with odds of 2.2/1 (45%), as opposed to DAM with 3.75/1 (27%).

PPS. Track the intrade.com odds below:

 

* I’d also be willing to take odds of c. 200/1 on figures like Igor Shuvalov or Sergey Naryshkin. They’re very unlikely, of course, but they are dark horse candidates and the payoff, in the event that they are nominated by the Kremlin – after which the chances of theirs winning will skyrocket to near 100% – would be huge.

** That is the reason I took 7/4 odds to bet on a Republican Presidency in 2012. The implied odds for that are 36.36%. My own assessment is that it’s basically a coin flip, because everything hinges on where the economy goes, which in turn depends on whether oil prices spike again between now and summer 2012. I view the odds of that as being significant, about break-even actually. Hence my bet.

EDIT: I was wrong.

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