Superbowl 2010 – The Wisdom of Crowds vs. The Smart Money

February 7, 2010
Posted by Jay Livingston

The Wisdom-of-Crowds theory says that the “crowd” – the average of interested speculators – is smarter than any one expert. If you want to figure out the weight of an ox or the location of a lost ship or the outcome of an election, go with the flow.

The contrarian position, at least on football games, says that the bookies are smarter than the general public. (For an earlier post on this topic, with links to still earlier posts, go here .)

Here’s what that means in the Superbowl. The bookmakers’ initial line had the Colts favored by 3½ to 4 points.* The money poured in on the Colts.

Bookmakers do not like to change their lines, especially by more than a half-point,** but in order to attract money on the Saints, they moved the line up to 5½ or even 6. That, plus some injury news on a Colts player, brought in Saints money, so much that some books moved the line down as low as 4 ½. The public is back on the Colts, and the line is going back up. As of this writing (11:45 a.m.), at some online, offshore books, you can get the Saints plus 6 (though you may have to pay 15% rather than the customary 10% on losing bets).

If you believe in the Wisdom of Crowds, you’ll follow the herd, give the points, and take the Colts. If you are a Smart Money contrarian, you’ll take the Saints and the points. (You’ll wait till game time draws closer, hoping that even more public money comes in on the Colts, driving up the line even higher.)

Of course, the Superbowl is one game, far too small an n to confirm one theory or another. On the whole this season, my impression is that public teams did better than usual – not enough to put the bookies out of business, but paring their profit margins somewhat.

If I were betting tonight, I’d take the Saints. I might even take them to win on the field and repay me to the tune of $170 to $100. But the Steelers didn’t even make it to the playoffs this year, so who really cares?


* Strictly speaking, the bookmakers set the line not to balance score but to balance the action. With an equal amount bet on each side, they make their 5% regardless of who wins on the field. But, especially in big games that will draw a lot of action, the initial line closely reflects the books’ assessment of the teams. (Old sax players may also be fond of Balanced Action.)

** A bookmaker who moves the line runs the risk of getting “middled.” Suppose the original line is Colts -3 ½ and everyone bets the Colts. The bookie raises the line to 5 and everyone now bets the Saints +5. If the final score is Colts 35, Saints 31, the outcome falls in the middle of the two lines, and the bookie loses all bets.

UPDATE 9:45 p.m.: If you
ve read this far, you probably know the outcome. The Saints won 31-17. The crowd was wrong on the point spread and on the under/over.

What Was the Question?

February 5, 2010
Posted by Jay Livingston

Survey questions may seem straightforward, but especially if the poll is a one-off, with questions that haven’t been used in other polls, you can’t always be sure how the respondents interpret them.

The Kos/Research 2000 poll of Republicans has been getting some notice, and no wonder. At first glance, it seems to show that one of our two major political parties is home to quite a few people who are not fully in touch with reality, especially when Obama is in view.

Do you believe Barack Obama is a racist who hates White people?
Yes 31
No 36
Not Sure 33

Do you believe Barack Obama wants the terrorists to win?
Yes 24
No 43
Not Sure 33

Should Barack Obama be impeached, or not?
Yes 39
No 32
Not Sure 29

I’m not sure what the results mean. Self-identified Republicans are about 25% of the electorate.* If one-third of them hold views that are “ludicrous” (Kos’s term), that’s still only 8% of the voters.

But what about non-ludicrous Republicans. Suppose you were a mainstream conservative and Research 2000 phoned you. To find out, I put some of the questions to a Republican I know – non-ludicrous (he reads the Wall Street Journal, he doesn’t watch Glenn Beck.)

Do you believe Sarah Palin is more qualified to be President than Barack Obama? (In the survey, 53% said, “yes.”)

Such a loaded question! I think she's nuts and he's sane – but in principle, she's right and he's wrong about most issues.

Do you believe Barack Obama wants the terrorists to win?

They don't WANT terrorists to win – no – but they don't care as much about the battle as most Americans do.

He might have said Yes to the interviewer just because he thought a Yes was more in line with the spirit of the question than with its actual wording. Or he would have refused to answer (and possibly have been put in the “Not sure” category?)

So the questions are more ambiguous than they seem, even on close reading.

Should public school students be taught that the book of Genesis in the Bible explains how God created the world?
Seventy-seven per cent of the sample said, “Yes.” And Kos, who commissioned the poll in connection with his book – to be called American Taliban – will see that result as rabid pro-creationism and anti-science. But re-read the actual question. Here’s what my sane Republican had to say:

This one's easy:
Absolutely yes. “public school students should be taught” a lot of important facts about our culture and civilization – that the Greeks invaded Ilium and destroyed Troy, that Confucius was the inspiration for a great religion, that Thomas A. Edison invented the electric light bulb, that Darwin in his Origin of the Species explained how animals change according to the process of natural selection, and “that the book of Genesis in the Bible explains how God created the world.” Why the hell not teach that fact? Who could say no to that?

Who indeed? Not me.

* The poll may have oversampled the fringe (see Emily Swanson at Pollster ), but those folks at the fringe are more likely to be active at the local level, so it’s possible they’ll swing some weight at the national level too. Their preferred candidate is, of course, Sarah Palin. So while political scientists think the poll may be exaggerating the far right (see Joshua Tucker’s excellent critique at The Monkey Cage), the Palinstas are hailing the poll as spot on.

Capitalism, the Movie

February 4, 2010
Posted by Jay Livingston

The Oscar nominations were announced, and Hollywood columnist Michael Medved is perturbed that two of the nominees, “Avatar” and “Up in the Air,” paint an unfavorable portrait of US corporations.

How could Hollywood continue to turn out these anti-business films when Americans, according to Medved, are so pro-business?
In a 2009 Gallup Poll about the “biggest threat to the country in the future,” 65% selected “big government” or “big labor,” while fewer than half as many (32%) fingered “big business.”
I’d just picked up Joel Best’s Stat-Spotting: A Field Guide to Identifying Dubious Data, so it occurred to me that if government, business, and labor were equally perceived as threats, lumping any two of them together (government and labor), would leave the third with half as many. But Medved didn’t have to put his thumb on the scale. Here’s the graph from Gallup.

(Click on the image for a larger view.)

People who see big government as the biggest threat do in fact outnumber those who point the finger at big business. But business beats out labor as a threat by three to one.

So why, when offered films like “Wall Street” or “Wall-E” do Americans not stay away in droves? If Medved had browsed more of the Gallup data, he might have found that American feelings about big business are more complicated than his own unconditional love. Even in the one question he does cite, nearly a third of us see big business as “the biggest threat to the country’s future.” That proportion had increased since the previous time Gallup had asked the question. In fact, suspicion of corporate influence was growing throughout the Bush years, perhaps because corporate influence itself was growing.

(Click on the image for a larger view.)

Hollywood has been making movies about greedy capitalists ever since nasty mustachioed landlords were tying poor damsels to railroad tracks. Some of these were successful; others bombed.*
As William Goldman famously said of Hollywood (and Medved quotes him), “Nobody knows anything.” That includes Michael Medved.

(The photo is not a still from a movie. It’s a scene I happened upon in Brooklyn last fall.)

Thirty years ago, Ben Stein seemed similarly perplexed by this same anti-business tendency among very well-paid Hollywood writers. Stein has a more sensible explanation than does Medved, at least as far as screenwriters are concerned. See my post here.

Snow Morning

February 3, 2010
Posted by Jay Livingston

It wasn’t nearly enough snow to close the school, and by afternoon, it will be mostly melted, but this morning, before most classes had begun, the campus looked like this.

(Click on the image for a larger view.)
The Spanish mission architecture – the white stucco walls and deep terra cotta roof tiles – of the original campus buildings is something I associate with warmer climates, but it looks good in the snow.

On the other hand, as you walk around the snowy campus, camera in hand, you realize how truly ugly some of the buildings from the 1950s and 60s are (and you keep them out of your pictures).