Economists love prediction markets and, perhaps not totally relatedly, are often put in charge of Latin American countries. But political prediction markets gave Clinton an 8% chance of winning in New Hampshire and pegged the GOP's chance at holding on to the Senate in 2006 at 85% three hours after the polls had closed. Why are they often wrong? And why did Anil Hara claim that there's no evidence that economists lead countries successfully?
Troubling questions, I suppose. But luckily, economists have their defenders. Here's Cass Sunstein, a law professor, on why prediction markets actually do work (the takeaway is "sure they are sometimes wrong, but sometimes they are not") and Daniel Drezner, a political scientist, on why it is possible that economists are effective leaders (the takeaway is "correlation isn't the same thing as causation").
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