The Wisdom of Crowds XLV

February 5, 2011
Posted by Jay Livingston

It’s become almost a tradition here at the SocioBlog: A big football game that generates widespread betting, and we once again consider “the wisdom of crowds” – the idea that the collective guess of the crowd (those people interested enough to take a stand) will be superior to the that of any one expert or group of experts.

I’ve been skeptical about this idea, at least with regards to football betting. This blog was only a few months old when I first posted about it (here), and readers who took the hint and went against the crowd won a sweet bet on the Bears. I’ve revisited the hypothesis a few times (here and here), including last year’s Superbowl (here), when the crowd was heavily backing the favorites, the Colts, driving the line from 3½ points up to 6. But the Saints won the game outright.

This year, the line opened with the Packers favored by 2½ or 3 points* and has not budged. The betting is equally divided, which is good news for the bookies. They’ll make their 5-10% no matter which side wins.

The only movement has been on the under/over line – the combined total points by both teams. That line opened at about 46, and went down to 44½. My guess is that this early shift represented “the smart money.” Now the line is gradually going back up, and may be as high as 46 by game time. Apparently the public is looking for a high-scoring game.

If you’re a contrarian, if you lean towards the wisdom of bookmakers rather than the wisdom of crowds, you’ll take the under and be happy with a 23-21 final score. It’s not a bet I would be eager to make however. The trouble with betting the under, as a gambler explained to me long ago, is that you sit there watching the game rooting for nothing to happen.

Go Steelers.**

UPDATE: The under/over line did not move much. Apparently, there was no strong crowd consensus, though if there was an imbalance, it was towards the over, which turned out to be the right choice. Final score: Packers 31, Steelers 25. The Packers played well; the Steelers made some costly errors.

* As of this writing (Saturday night), if you want to bet the Steelers plus the three points, you have to give up odds of 120-100 (i.e., you get $100 if you win; you pay $120 if you lose). If you take only 2½ points, you can get odds as low as 105-100. And conversely, if you bet the Packers, you pay more to give only the 2½. But it looks as though the line is inching up. By game time, I expect most bookmakers will have the line at 3.

** It is a bit more difficult to root for Pittsburgh this year – not-so-gentle Ben and his deserved rating among fans as the Superbowl’s most disliked player, James Harrison as #1 in being fined by the NFL. And according to yesterday’s New York Times, the Steelers are even on the wrong side of the concussion issue while the Packers are on the side of the angels.