The Wisdom of Crowds vs. The Smart Money

January 3, 2009
Posted by Jay Livingston

It’s NFL playoff season, and here at the Socioblog, that means it must be time for The Wisdom of Crowds vs. The Smart Money.

The idea behind the “wisdom of crowds” is that the average guess or prediction of a large number of people will be more accurate than that of a few experts (“the smart money”). I looked at these principles two years ago, in a series of posts (here, here, and here).

Today’s game between the Atlanta Falcons and the Arizona Cardinals seems to pit the public against the insiders. The opening line had the Falcons as 3-point favorites, and the public money came in on the Falcons. Normally, the bookmakers would try to balance their books and get an equal amount of money on both sides. To encourage more people to bet on the Cardinals and discourage Falcon bets, they would raise the point spread. Falcon backers might think twice if they had to give up 3 ½ or 4 points rather than 3.

But that’s not what happened. Instead, the line went down. On Friday, Cardinal bettors were getting only 1 ½ or 1 point. Apparently, in addition to the public money coming in mostly on the Falcons, the bookies also got “smart” money on the Cards. The oddsmakers were responding not to the amount of money but to the source. If the smart money was on the Cardinals, they would lower the line to encourage the public to bet on Atlanta.

So today’s game offers a clear choice. If you believe in the wisdom of crowds, you’ll follow the public and bet the Falcons and be happy that you have to give up only a point or so. If you think the smart money is smart, you’ll bet the Cardinals. (But remember, the smart money bet early and got the Cards plus 3 points; you might only get one, or none. Even so, my money’s on the Cards.)

UPDATE Saturday Evening.
The money must have kept coming in on the Cardinals, because by game time they were favored by as much as 2 ½ points. The Cardinals won the game 30-24. The smart money got it right.

Sociology Blogger Scoops The New York Times

January 2, 2009
Posted by Jay Livingston

Back in 2008, I wrote about the New York Parking Violations Bureau – particularly their willingness to haggle. Get a ticket and don’t like the high number on the fine, no problem. They’ll offer you a one-third discount. (The blog post is here).

Today, the New York Times finally breaks the story on page one, above the fold.

Wanna Buy a Brett Favre Jersey?

December 29, 2008
Posted by Jay Livingston

After last season, the Jets traded away Chad Pennington in order to get the future Hall of Fame quarterback Brett Favre. Favre then spent the latter half of the season leading the Jets out of the playoffs.

Steven Dubner of Freakonomics writes what purports to be a post about “deadweight loss” and the inefficiency of gifts but is really a disappointed fan’s angry kvetch. In between nasty digs at the great QB (all supported by data), Dubner asks the economic question:

So how do all those people who paid $80 for Favre Jets jerseys feel today? Do they wish they’d spent their money elsewhere? How much would they pay for the same jersey today? Did they derive $80 worth of pleasure from it up to this point — i.e., was the thrill of the first two-thirds of the season worth the pain of the last third?

To answer the question, I checked Craig’s List, and apparently the owners of those Favre jerseys are not rushing to unload them at any cost. I looked in Sporting Goods and Clothing. Here are the results

• Individuals selling Favre jerseys: 2
• Asking price: $60

(Three other sellers had the Jets #4, but they were commercial dealers not disgruntled fans.)

For comparison, I also checked Eli Manning jerseys. (The Giants are in the playoffs, having won their division handily with a 12-4 record.)

• Individuals selling Manning jerseys: 2
• Asking price: $60

(Jets fans note: dealers on Craig’s List in Miami are asking $55 for Chad Pennington jerseys.)

Job Search - Parody Version

December 29, 2008
Posted by Jay Livingston

The MLA parodists, Aaron Winter and Andy Warren, are worth detour. This year, they’ve done letters of application and recommendation.

(Click on the image for a larger view.)

The allusions are literary, but you don’t have to be an insider to get most of them. (I never took Latin, but I’m guessing that the motto of their Riverdale University, “Ex limoni ut mellitus,” is something like, “When you have lemons, make lemonade.”)


The full file, with links to back issues, is here.