Will Twitter survive Elon Musk? readers are Googling this question and reporters and columnists are working hard to answer it. But journalists are neglecting one of the most promising sources for answering it: prediction markets and forecasting platforms.
Prediction markets have been around in one form or another for decades and have already made their forays into journalism during elections. 2023 will be the year they become a source for other types of stories, simply because there is just too much activity in the world of crowd forecasting right now to ignore. For almost any question you can think of, there are multitudes online making predictions. And if journalists come up with a question that isn’t being forecasted yet, there are platforms where they can pose it themselves.
For example, here are some forecasts available as of this writing that speak to the future of Twitter:
These figures are aggregations of many individual fan predictions. Why trust them?
First, the theory: like economists Justin Wolfers and Eric Zitzewitz explain, prediction markets work because they provide: “1) incentives to seek information; 2) incentives for the disclosure of truthful information; and 3) an algorithm to aggregate diverse opinions”.
They also have a solid track record. Research has shown that prediction markets predict election results better than Gallup polls, for example. They have accurately predicted the box office performance of movies, have matched the accuracy of professional economic forecasters, and have even done a better job than analysts or oil markets in predicting the US invasion of Iraq. (“Prediction Surveys”, which also ask participants to make forecasts but do not use a market, have an equally strong track record.)
Prediction markets are not perfect. They are only as good as the wisdom of their participants and the information those participants have access to. And, like any market, they can be vulnerable to unsupervised manipulation.
However, they are a valuable tool for journalists and a complement to other sources. Reporters can use them in the same way that financial journalists use other markets: they can be a news source, as well as one source among many that explain what is going on.
The Economist has shown how this can be by asking the experienced meteorologists at Good Judgment Inc. to make predictions for its annual issue “The World Ahead”. The issue still includes the magazine’s traditional reports, as well as forecasts from The Economist Intelligence Unit, the company’s research arm, and predictions from big names in politics and business. The inclusion of Good Judgment’s “super tipsters,” who were selected based on their accuracy forecasting on open platforms, is an addition to, not a replacement for, traditional journalistic sources.
“The big picture here is that data-driven approaches are becoming popular in all kinds of journalism, and forward-thinking/predictive journalism should follow suit,” said Tom Standage, deputy editor at The Economist who edits The World Ahead. “This is why we partner with Good Judgment, and also why The Economist builds its own predictive models for elections, and why we often cite prediction markets as well.”
Here’s a quick tour of the crowd forecast landscape:
The big difference between these platforms and a publication like fivethirtyeight, which also makes predictions and also has a strong track record, is that they rely on the collective judgment of their users rather than statistical models. That allows them to make forecasts on topics where there is less data, like the fate of Twitter.
Citing these platforms in stories is a good first step for journalists. The next step is for the publications to invite their readers to participate. That’s what I’ve been doing with my newsletter: Every week I write about an economic or business story and ask readers to make a forecast. Over time, readers see how their forecasts turn out, learn from each other, and hopefully improve their thinking. This process formalizes something that most journalists already recognize: your audience collectively knows a lot more than you do.
Walter Frick is the founder of not rival and contributing editor of the Harvard Business Review. He was previously an executive editor at Quartz and a visiting Knight Fellow at the Nieman Foundation.