Categories:
Behavioral Economics
Revealed Preference
Over at PJ Media, Rich Moran writes:
Since there is a pretty good possibility that Prime Minister Benjamin Netanyahu and Israel are likely to “take” a nuclear bomb down the gullet thanks to the ignorant naivete of the president and sycophants like [Gwen] Ifil, that particular tweet might come back to haunt Ms. Ifill one day.
It seems in context that by “possibility,” Mr. Moran means probability.
So how probable? And in what time frame?
I propose the following bet.
I bet $500 that the Iranian government will not attack Israel with nuclear weapons before September 2, 2025. If I win, I win $100. If Mr. Moran wins, he wins $500.
Deal?
READER COMMENTS
Mike Hammock
Sep 2 2015 at 7:12pm
Anyone one want to make a bet on whether Mr. Moran will take David’s bet? (I predict that Mr. Moran will not accept the bet.)
Henri Hein
Sep 2 2015 at 7:12pm
Excellent. I offer to escrow your bet. You send me $500 and Mr. Moran sends me $100. On Sept. 2, 2025, I will send the $600 to the winner. I won’t even take a cut. 😉
David R. Henderson
Sep 2 2015 at 7:24pm
@Mike Hammock,
I bet he won’t also. But his reasons, if he ever gives them, would be interesting.
@Henri Hein,
Thanks SO much for your kind offer, Henri. No thanks. 🙂
Arnold Kling
Sep 2 2015 at 7:39pm
I would suggest that you refine the bet in order to address the possibility that Israel bombs Iran’s nuclear facilities. As it stands, you would win the bet if Israel were to do so successfully, but I assume that you do not really wish to win that way.
Greg G
Sep 2 2015 at 8:20pm
I think you are right David. Authoritarian regimes are the most likely to behave aggressively soon after they take power. The Iranian regime seized the American diplomats very soon after it took power. I don’t think they would do anything comparably risky to themselves today.
The longer an authoritarian regime is in power the more its leaders get attached to the perks of power and tend to avoid taking the kind of risks that could cost them that power.
JLV
Sep 2 2015 at 8:39pm
My understanding of the content of the Iran deal opposers (beyond of course, “Obama wants this, therefore I don’t”, which probably correctly categorizes ~90% of roll call votes in a polarized environment) is that the deal makes it more likely that Iran will develop a bomb after the ten year window of heightened inspections/restrictions.
A bet that takes that criticism seriously would probably extend the end date to 2030.
Kendall
Sep 2 2015 at 9:11pm
Maybe the bet should be for Moran to pay for Henderson to go to Israel. If Moran is right, Mr. Henderson would have to spend a week at ground zero, if Moran is wrong, Mr. Henderson gets a free vacation in Israel.
David R. Henderson
Sep 2 2015 at 9:42pm
@Arnold Kling,
I would suggest that you refine the bet in order to address the possibility that Israel bombs Iran’s nuclear facilities.
That sounds reasonable. I’ll consider it if Mr. Moran responds.
As it stands, you would win the bet if Israel were to do so successfully, but I assume that you do not really wish to win that way.
True. By the way, Arnold, I think an Israeli attack is a low-probability event too, although higher than an Iranian nuclear attack on Israel.
@JLV,
A bet that takes that criticism seriously would probably extend the end date to 2030.
True. But I want to be around to collect or pay.
@Kendall,
Maybe the bet should be for Moran to pay for Henderson to go to Israel. If Moran is right, Mr. Henderson would have to spend a week at ground zero, if Moran is wrong, Mr. Henderson gets a free vacation in Israel.
Doesn’t sound good. Assume that a “free” vacation in Israel costs $2,000. Then, for the odds to be the same as what I offered, I would have to disvalue being at ground zero at only $10,000. I think I would disvalue it at substantially more.
n
Sep 2 2015 at 10:15pm
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David R. Henderson
Sep 2 2015 at 10:42pm
@n,
That aside, assuming arguendo your apparent resolution of that problem, is $500 payable in 10 years really enough skin even to achieve your goal of keeping yourself and Mr. Moran honest? Even $500 in present value terms? Doesn’t really sound like you’re betting the farm on this one.
Are you saying that you really think that Mr. Moran will bet more than $100? I seriously doubt it.
BC
Sep 3 2015 at 4:30am
What would the odds have been before the deal? Also, what would the odds be that some other Middle Eastern Arab country, say Saudi Arabia, Jordan, or even Syria, would attack Israel with nuclear weapons? That would provide some perspective as to whether 1:5 odds corresponds to (relatively) high, low, or medium probability.
Kendall
Sep 3 2015 at 6:59am
Does your proposed bet mean you think there is a 20% chance of Iran hitting Israel with a nuke? If so, how can anyone expect Israel to take that risk?
Nathan W
Sep 3 2015 at 7:25am
Only a suicidal Iran would send that bomb (which they don’t even have). I would bet against it any day.
What the hawks really want it the ability to attack Iran once they manage to whip up public support for it, but if Iran ever gets nukes then they won’t be able to because only crazy people attack nuclear states (hence why only diffuse terrorist groups ever attack Israel, the only state in the ME with nuclear weapons).
Oh, and the whole point is moot because they don’t even have a bomb.
The fake alternative approach of “negotiating” with Iran by first crushing them accomplishes little, but makes it clear that some people see the objective as defeating Iran, not negotiating with them.
If I were at the helm in Iran, I would desperately want the nuclear deterrent because of major political forces in the USA that would just LOVE to attack the country.
Cory Waters
Sep 3 2015 at 7:35am
When I read the bet terms I had the same thought as Kendall. A 20% chance of annihilation in 10 years sounds pretty grim.
Njnnja
Sep 3 2015 at 8:48am
@David R. Henderson
Doesn’t sound good. Assume that a “free” vacation in Israel costs $2,000. Then, for the odds to be the same as what I offered, I would have to disvalue being at ground zero at only $10,000. I think I would disvalue it at substantially more.
I think 5:1 odds are way too low. Even if you believe that the probability of the event is very small, the consequences are so dire that any reasonable utility curve will have an incredibly strong “loss avoidance” reaction and value the expectation at a very large value. So if someone thinks that the probability of the event is only 1%, the person might be indifferent between having $100 and a non-nuked Israel and having $1,000,000 and a nuked Israel, which would put the odds at $100 * 99% : $1,000,000 * 1%, or about $100 vs. $10,101 for a “fair” bet.
@Greg G
So then the bet might really be whether the current Iran regime can stay in power for the next 10 years.
Greg G
Sep 3 2015 at 8:55am
Cory,
No one knows what the exact risk is but, just for the sake of argument, let’s assume 20% risk within 10 years is right. It’s not at all obvious that attacking Iran reduces that risk.
As far as I know, virtually everyone agrees that, on the current trajectory without an agreement Iran gets the bomb sooner rather than later. Few think we can kill their entire nuclear program in an attack they have been anticipating for years. Attacking them first would give them the best possible justification to counter attack as soon as they get nuclear weapons. It would also increase the willingness of other nuclear countries that disapproved of our attack to help them with their nuclear program.
Nathan is right. The Iranians have many good reasons to be afraid of us and and believe that possession of a nuclear deterrent would make them safer.
The mere fact that one option is unappealing does not mean the other option is better.
db
Sep 3 2015 at 9:01am
Doesn’t this bet presume that the governments of at least one of Israel and Iran will continue to exist in at least roughly their present forms in 2025? How would the bet resolve in case of revolution in either country, or another destabilizing event that affects either country fundamentally?
Greg G
Sep 3 2015 at 9:02am
Njnnja,
The current Iranian regime is very unpopular with its own people. The Iranian people (as opposed to their government) are the among the most liberal and pro-western in the entire Islamic world.
If the current regime falls, it is much more likely to be replaced by a friendlier one. An attack by us or Israel would have the effect of uniting the country behind the current regime.
Jesse C
Sep 3 2015 at 10:47am
@Nathan W: if Iran ever gets nukes then [Israel] won’t be able to [attack Iran] because only crazy people attack nuclear states…
Good point. I wonder what the probability is of ISIS ever having a nuke. Small, but not impossible? A lot would need to happen, but I don’t think they need to become un-crazy, necessarily.
Also, is anyone here in favor of opening up trade with ISIS, either now or in the future.
(This is not meant as a proxy argument for Iran)
RPLong
Sep 3 2015 at 11:37am
Does this include “dirty bombs” and other such “quasi-nuclear” weaponry?
Niku
Sep 3 2015 at 2:36pm
What “particular tweet”? I happen to like Gwen and think that she is the most talented and appealing woman of her race, no, make that “person of her race” to have ever appeared on TV. I have noticed, of course, that she appears to be a different woman when she’s not on Newsroom, but I’ve never seen anything from her that is objectionable, uninformed, or propagandistic. To hear her described as a “sycophant” merely casts doubt upon the one describing her as such. I also like Juan Williams, too. Shoot me.
Cory Waters
Sep 3 2015 at 3:58pm
@Greg G
My comment wasn’t about what we should or shouldn’t do with Iran. I’m shocked that someone would put the probability of a nuclear attack at 17%. That’s really high– and scary.
David R. Henderson
Sep 3 2015 at 4:23pm
@Kendall,
Does your proposed bet mean you think there is a 20% chance of Iran hitting Israel with a nuke? If so, how can anyone expect Israel to take that risk?
No, Kendall. Notice which side of the best I’m proposing to take. I don’t often propose bets that have a zero expected value based on my priors. I came up with a number that I think faithfully reflects Moran’s meaning of “pretty good possibility.”
David R. Henderson
Sep 3 2015 at 4:24pm
@Niku,
No need to shoot you. As I’m guessing you noticed, but maybe you didn’t, my post had nothing to do with Ifill.
Emanuelle Goldstein
Sep 3 2015 at 6:57pm
Is there any significance to September 2, 2025 or was that a random number?
David R. Henderson
Sep 3 2015 at 8:25pm
@Emanuelle Goldstein,
Is there any significance to September 2, 2025?
Yes. Check the date of this post.
Rick Moran
Sep 3 2015 at 10:11pm
Dear Doctor Henderson:
I am flattered that you’d propose a bet on whether Israel will be nuked before 2025. Unfortunately, the bet is far too rich for my blood.
Besides, I think the chances are less than 1 in 5 that Iran will commit suicide by nuking Israel. But say it’s 5%. Unlike yourself who tries to predict the future for a living, I am blessed with no such gift. But there are certainly scenarios dreamed up by the Pentagon where a nuclear Iran would sacrifice itself to destroy the Jewish state. Their violent, eliminationist rhetoric would admit to that possibility.
As for Ms. Ifill, her tweet (“take that Bibi” following Sen. Mikulski making passage certain), was described by that famous member of the vast right wing conspiracy and right wing nut – the PBS Ombudsman – as being “inexcusable.” Perhaps I should have written it and left it at that.
David R. Henderson
Sep 4 2015 at 9:51am
Dear Mr. Moran,
Thanks for your response. In my view, my proposed bet was a success. Sometimes I bet for the fun of it and sometimes I bet to make money. But when I propose bets on Econlog, it’s typically to advance a conversation or discussion. When I saw your words, I pictured you believing in a probability of about 20%. So I proposed a bet accordingly. That apparently caused you to evaluate what you think it is, and I now know that you think it’s less than 20%.
By the way, contrary to widely held belief, economists don’t tend to predict the future for a living. As the late John Kenneth Galbraith said in, I think, the 1960s or 1970s, one of the main reasons we make forecasts about the economy in the future is that people keep asking us to.
Nathan W
Sep 4 2015 at 11:55am
@ Jesse
I’m generally a staunch peacenick, but I’m not stupid. I support bombing any production facility that would help them lay their hands on another $5. Opening up trade with them? Not a chance.
I don’t think there is any point in negotiating with these guys. Even with the Taliban, I could understand that they were essentially standing up for highly patriarchal traditions of backwards mountainous areas, and could at least respect them for that. ISIS, however, has in fairly short order completely resurrected the practice of slavery and sexual servitude (which yes, the Koran technically permits, but more importantly Mohammed was very active in encouraging people to give freedom to their slaves). Moreover, ISIS is highly engaged in social media campaigns to whip up terrorism within Western countries, which is altogether different than the broad anti-US statement of Iranian clerics, which appear primarily targeted for domestic consumption (blame evil USA for Iran’s domestic problems, a tactic used very successfully to shore up domestic support by Castro, among others).
ISIS is no Iran. Iran is no ISIS. I support removing ISIS by any and all means necessary, and I think it is worth the heavy short-term humanitarian toll to take the time to do so under a highly legitimate international consensus. The problem is that the only people who seem willing to take action are precisely the same actors who almost categorically stand against the notion of building international consensus as a pre-requisite for military intervention.
ISIS with nukes? Shudder. Their battlefield tactics reveal them as suicidal and altogether willing to suffer extremely high casualties for questionable strategic gains. The logic of mutually assured destruction, whereby nuclear weapons are perceived as a protection against conventional war, completely fails when the other side is comprised of suicidal fanatics. Iran, however, I think can be reasoned with. They are not suicidal and so will not use the bombs, even if they get them.
Neil S
Sep 4 2015 at 3:21pm
Prof Henderson,
Having pondered this for a number of days, I believe there are a number of flaws in your proposed wager.
I would argue that if you are not at least 80% confident in your position, you are making a making a morally reprehensible gamble on the future of millions of residents of Israel.
Secondly, of course, the possibility of an attack that can not be traced directly back to Iran is quite real.
And of course a wager that doesn’t hurt to lose is meaningless.
I propose a counter-wager with you. I am willing to wager $10,000 at 5-1 odds that Israel will be subject to an attempted nuclear attack within 15 years. If I lose, I will pay you $10,000 15 years from your acceptance of this offer. Otherwise, you will pay me $50,000 within 1 month after an attempted nuclear attack on the state of Israel.
You have my email address. I am quite serious about this wager. I am prepared for you to publish my full name and contact information, as well as to sign a legally binding agreement.
I eagerly await your response.
Regards.
David R. Henderson
Sep 4 2015 at 9:40pm
@Neil S,
No thank you.
Khodge
Sep 6 2015 at 6:07am
@Niku,
Prof. Henderson’s response notwithstanding, the only experience that I have of Ifell is in a presidential debate where, as “moderator,” she defended Pres. Obama by countering a true statement of Romney’s by saying he was wrong. In a nationally televised event, that is twice as egregious because listeners are much less likely to hear or believe the fact-checkers on a fact that came from someone who ought to have remained silent.
Khodge
Sep 6 2015 at 6:33am
The wager is moot at this point but I see it as entirely plausible that Iran would give small nuclear weapons to their proxies in Palestine; this would be consistent with their history of supporting terrorism. The use of said weapons, I would expect, would be inevitable given the willful slaughter of their own people and cultural heritage that we are currently seeing.
David R. Henderson
Sep 6 2015 at 8:34am
@KHodge,
Prof. Henderson’s response notwithstanding, the only experience that I have of Ifell [sic] is in a presidential debate where, as “moderator,” she defended Pres. Obama by countering a true statement of Romney’s by saying he was wrong. In a nationally televised event, that is twice as egregious because listeners are much less likely to hear or believe the fact-checkers on a fact that came from someone who ought to have remained silent.
It was egregious and it wasn’t Ifill. It was Candy Crowley.
Comments are closed.