Happy New Year!
Twelve years ago, I was struck by the following passage in Mark Steyn’s America Alone: The End of the World As We Know It:
The U.S. government’s National Intelligence Council is predicting that the EU will collapse by 2020. I think that’s a rather cautious estimate myself. Ever since September 11, I’ve been gloomily predicting that within the next couple of election cycles the internal contradictions of the EU will manifest themselves in the usual way.
Since it seemed rather absurd, I publicly challenged Steyn to the following bet:
If any current EU member with a population over 10 million people in 2007 officially withdraws from the EU before January 1, 2020, I will pay you $100. Otherwise, you owe me $100.
Steyn accepted; so did my co-blogger David Henderson. Since today is January 1, 2020, and no such country has officially withdrawn, I have won my bet.
This victory brings my betting record to 20 wins, 0 losses.
After the Brexit referedum, Steyn declared victory in our bet. Several friends advised me to concede, even though the referendum was merely advisory. I refused. Scenarios like the UK’s long limbo were precisely why I included the phrase “officially withdraws” in the original terms. Since the UK remains in the EU today, it has clearly not officially withdrawn yet. End of story.
Philip Tetlock notes that when experts make barely incorrect predictions, they tend to plead bad luck (“I was almost right”); when they make barely correct predictions, however, they tend to plead great skill (“I was not almost wrong”). I will not do this. Although the UK remains in the EU today, it will leave on January 31, 2020. Therefore, I clearly got lucky. Or to be more precise, I first got unlucky (since David Cameron could have easily refused to call the Brexit referendum in the first place), and then I got lucky three times in a row.
In contrast, Steyn’s original claim was not remotely close to true. The EU didn’t “collapse” by 2020, the year Steyn described as “cautious.” Indeed, by his own account he has been incorrectly making extreme predictions on this topic for the past 19 years. While I give him intellectual credit for making our original bet, he really should reflect on his attraction to hyperbole and overconfidence.
Unlike Steyn, David Henderson genuinely was unlucky. To the best of my knowledge, David has made no extreme predictions about the EU. He simply thought that I offered Steyn overly generous terms to coax him into a bet, and jumped on the perceived opportunity.
People have occasionally asked me if I foresaw the political chaos of the last few years. My answer is: No and Yes.
No, I didn’t not foresee the specific scenario that unfolded.
Yes, I did foresee that any attempt to leave the EU would be subject to a long series of obstacles, each of which could delay or even derail the exit process.
What’s the most important thing I learned from this twelve-year bet? This: While my commitment to betting has great cognitive benefits, it also has great emotional costs. During the last two years, I have spent far too much time wondering if I could salvage my perfect betting record, and far too much time checking electionbettingodds.com. This bet interfered with my inner harmony, my commitment to detachment from this corrupt society. From now on, I’ll remember these costs before I bet.
READER COMMENTS
Mark Brophy
Jan 1 2020 at 12:39am
That’s an incredible record, 20 in a row! Do you have any thoughts on the stock market? Which stocks will perform best in the next 12 months?
Scott Sumner
Jan 1 2020 at 12:46am
Congratulations! I have also been following the story, with an eye toward whether you would win the bet.
robc
Jan 1 2020 at 4:35am
You will fix the emotional cost issue when you stop worrying about being perfect and realize you are being inefficient. A bettor who never loses is passing up too many opportunities. You win more (net) if you bet way more at a slightly lower win rate. Assuming even bet amounts, 50-10 would be a much better record than 20-0, for example.
So stop worrying about being perfect and find more fish.
Peter
Jan 1 2020 at 5:29am
It’s not about profit maximizing but skin in the game. The real annoyance I have is the the paltry bet sizes don’t really encourage that sort of honesty. Would love to see more bets along the lines of “10% of total annual income”. OFC will be hard to find people to make that bet but that just shows their insincerity about their position.
Ron
Jan 1 2020 at 1:54pm
Or risk aversion. Why the implicit assumption of risk neutrality is invoked across all wagers of all sizes is beyond me.
robc
Jan 1 2020 at 2:44pm
If Bryan lost sometimes, he might be able to sucker someone into a larger bet.
Mark Brophy
Jan 3 2020 at 10:25am
It’s about maximizing profit. Brian should give stock recommendations so that the average blog reader can profit. He should place more bets and recognize that he only needs to be right 70% of the time. Capital allocation is the most important task of any society so the people who do it best should profit most.
Phil H
Jan 1 2020 at 7:23pm
I love the honesty of Caplan’s comment on betting. It really brings home a point: more betting might be a very good idea, but it requires culture and infrastructure that we don’t really have at the moment. It exists in some places: the stock market can be understood as betting on companies. But in most other areas of life, a successful betting market would require institutions, brokers, education, and a shift in public and emotional understanding of what betting means.
robc
Jan 2 2020 at 8:12am
I should point out that I am 2-0 in public internet bets, so I should consider taking my own advice and/or win 18 more in a row to catch up to Bryan.
In 2011, shortly after he became the starter for Denver, I bet that Tebow would win a playoff game as starting QB before he was out of the NFL or switched to a new position. In the wild card game that season, Tebow hit Demaryius Thomas for a 80 yard TD on the first play of OT to win me my bet. And just in time, as he was quickly out of the league.
In 2013, just after the 5th consecutive loss in the series, I bet that Paul Johnson would beat Georgia again before being fired as head coach of Georgia Tech. They won the next year (and again in 2016), winning me the bet on the first try.
Neither was an obvious gimme, and the first one especially I got lucky on.
Daniel Klein
Jan 1 2020 at 5:53am
Great post! And congrats on 20-0, remarkable.
Dylan
Jan 1 2020 at 10:30am
The only thing that surprises me about your betting record is that you find people willing to make these kinds of bets at even odds. I’ve not reviewed every one of your bets, but the theme I’ve seen from the ones I’ve had, is that of betting for the status quo. That’s fine, and is going to be right most of the time, if you can get even odds, that’s a great strategy. But your opponents should realize this, and give you asymmetrical odds.
Mark Brophy
Jan 3 2020 at 10:28am
If it’s easy to find fools who believe that the status quo can be easily disrupted then the best bet is to short stocks such as Tesla and Uber and Beyond Meat.
Kurt Schuler
Jan 1 2020 at 12:58pm
In terms of the spirit rather than the letter of the bet, I would call this one a draw. The EU’s second-largest economy is leaving, barely outside the window. Had the British political class been less resistant to the majority of voters, it would have happened inside the window.
Mark Z
Jan 1 2020 at 1:13pm
I was actually concerned that Steyn might claim to have won ’in spirit’ which I think would be wrong; losing by a hair is not the same as winning in spirit. But yes, in spirit, it’s pretty much a draw.
David
Jan 1 2020 at 6:42pm
A draw on “The EU will probably collapse in about 10 years?” You have to be joking.
Mark Z
Jan 2 2020 at 6:41pm
No, almost a draw on ‘a country larger than 10 million people will leave the EU by Jan. 1, 2020,’ the statement the bet was on. Read the post.
Hazel Meade
Jan 2 2020 at 9:47am
Another downside is that it might be destructive of personal relationships, for instance due to disputes over what constitutes winning.
Dylan
Jan 2 2020 at 10:29am
I had a pretty good betting record as a child. My step-father in particular liked to bet with me, and to the best of my recollection, I never lost…but there were a fair number of times when a “wanna bet” got me to back down on a claim.
These bets though were almost always bets about factual states of the world, because I tend to favor Yogi Berra’s advice on making predictions.
3 bets particularly stand out in my memory.
My first big bet – I’d seen a “New Unabridged” version of The Stand on sale at the bookstore and told my stepfather about it. Having read that book when it first came out, and remembering that the original was pretty long, he thought for sure the “new” version must just be the original one, and that they had sometime in between put out a shorter version, and were now rereleasing the longer version. He bet me $100. When he lost, he paid me all in $2 bills/
The bet I worked the hardest on – There’s a song by They Might Be Giants about the sun, that rattles off a ton of information about the sun. One of the facts was that the sun was so big that a million earths could fit inside. My step-dad was skeptical. Ended up having to learn new math skills to account for the empty space between earths if you lined them all up. Somewhere I think he still has the very long proof I did for that one.
The bet I thought I was going to lose even though I was right – As a kid my step-dad would take me to movies once a week while my mom was taking night classes. One of those was a movie we were expecting to be a light hearted comedy, and instead turned out to be a very serious (and not very good) drama about mental illness. A few years later, he comes home from the video store with this same movie, convinced he had never seen it. I bet him $100 immediately, and sat down to the movie eagerly awaiting my money…but 3/4 of the way through, he was still convinced he’d never seen it. Only at the very end, did he start remembering details before they happened.
The internet made most of that kind of betting unneeded, because it is so easy to just immediately look up information. For other things, I’ve got a lot of strong opinions about the way things ought to be, but very weakly held positions on the way things will actually turn out.
IVV
Jan 2 2020 at 10:52am
Did Raphael Franck eventually relent on his claim of victory?
Shane L
Jan 3 2020 at 5:30am
What is remarkable to me is Mark Steyn’s astonishing comment that ever since 2001 he has been expecting the collapse of the EU to be imminent. Not that one country would leave, but that the whole thing would collapse.
Here in Europe, it often seems that news on American politics is depressing and shocking, and I occasionally get the impression that it is the United States that is facing terminal decline. This is probably because news media focus on bad news and on immediate, recent news, not (like Bryan) on longer term trends. Thus I console myself that both American and European politics are probably more healthy than international media coverage implies.
Mark Brophy
Jan 3 2020 at 10:32am
The USA and Europe are insolvent so their currencies are doomed to inflation to repay the debts. The results won’t be good because we need stable money.
Jim Parks
Jan 6 2020 at 1:14pm
Steyn technically lost the bet and as he is a man of his word, he’s paying up.
That said, it’s sad that the “attempt to leave the EU would be subject to a long series of obstacles, each of which could delay or even derail the exit process” trumped the will of the people. Hopefully the people have now finally won because if they haven’t, things could get nastier than anyone expects.
rich todd
Jan 6 2020 at 3:21pm
I think a fair argument goes for Steyn: the will of the people was expressed in 2017. That it has been delay before implementation seems ministerial at best. The actual date of withdrawal, regardless of when it now occurs, is really nunc pro tunc.
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