There are a lot of popular, heated, societal disagreements, and yet I am not getting rich off of them. Neither is anyone else to my knowledge.
Why isn’t anyone getting arbitrage out of societal disagreement? If half of our society believes A with 80% probability, and the other half believes not A with 80% probability, it should be easy to make money off of this.
You make money off of 80% 80% disagreement by offering $10 to the first group if it turns out that not A, on the condition that they pay $30 if it turns out that A. You then offer $10 to the second group if it turns out that A, but they pay $30 if it turns out that not A. Whether A or not A turns out to be true, you make $20 because in either case you are paying out $10 and being payed $30.
This is in fact what gambling organizations and bookies do I’m pretty sure. Casinos and sports gambling organizations probably do this. People who make their living trading financial assets also take advantage of these kinds of disagreements when possible, I’m sure, but it seems to me like there are a lot of societal disagreements that do not get arbitraged this way.
There is no shortage of popular heated disagreements. It looks like there are plenty of things for which millions of people are 80% on the affirmative and another million are 80% on the negative, and even better, these groups often don’t talk much to each other. So it looks at first glance like there is a bunch of money lying around that could be taken by somebody, but isn’t being taken by anybody. This is weird and warrants an explanation.
If people have really concave utility functions with respect to money, the profits won’t be as high. This doesn’t seem to be a problem with sports gambling though, so I don’t think that’s the explanation.
Maybe it’s a bargaining effect? People know they could get better odds with the people they actually disagree with, and so they won’t take offers at worse odds, but I don’t really see this being a problem with respect to sports betting. People don’t entirely cut out the middle man to get better odds. And we in fact rarely see people betting on the hot button issues of the day.
Maybe it’s because it’s illegal? But I think if there were a bunch of money lying around, somebody would have figured out a way to do it legally by now. They would have asked for special permission in whatever mysterious ways other legitmate gambling organizations do.
Maybe what is going on is that the untapped disagreement resources I see lying around are considered sacred in some sense, and it is widely considered wrong to bet on them? This doesn’t seem totally right either since I do see some people publicly take bets on controversial topics, and they don’t get shamed for it much at all unless it involves a body count. I think there might be something to that explanation though.
Maybe it’s hard to operationalize the kinds of disagreements it’s fun to disagree about? It’s more fun to disagree about something if nobody will ever be able to say I told you so. To borrow Robin Hanson’s frame, the disagreements are about far away things, and disagreements about far away things are by their nature hard to settle. Still, it should in principle be possible to get these folks to make different settleable predictions.
Maybe the disagreements I am noticing aren’t really about any particular predictions or ways that the world might be, but about taste or allegiance? This also seems plausible to me, but it also seems like it wouldn’t be that hard, and there’s plenty of disagreement to make the costs of figuring out operationalizations worth it.
Another possibility is that there are people doing this in subtle ways that I am not aware of, and this also seems plausible to me.
In any case, it seems like there is some tension in simultaneously believing that society is chock-full of heated, overconfident, genuine disagreements, and also believing that nobody is making money off of it. Maybe somebody should be getting rich off of it. If you notice such a disagreement, and you figure out a way to operationalize that disagreement, that seems like it could be an opportunity to get rich.
Figuring Figuring 