November 10, 2006

In defense of Intrade

Ezra Klein links to what Atrios says about Intrade's performance during the midterm elections:

As he writes, "the idea that there's something magical about market aggregated preferences seems to have infected the minds of too many people. They provide a cute distillation of conventional wisdom, but that's all."
But whoever said that information markets were anything more than an outlet for collecting accurate and up-to-date information?It seems like Atrios is bitter that Intrade doesn't predict the future. Intrade can't tell us the result of the 2008 presidential election, but it can take all the relevant information available and empirically represent the chances a given contender has in the 2008 presidential election. Atrios might think that is a "cute distillation of conventional wisdom," but to me it is a way of confirming that the people who have money riding on a given event are putting their money where I would too. For example, on election night, when CNN started showing that Webb had a slight lead in Virginia, I could confirm my suspicion that this meant the Senate would go Democrat by seeing what the pros were doing over on Intrade. That seems like a pretty valuable resource to me.