Hello all. I'm an open-minded economist who mostly hangs around
libertarian-leaning economists, but who is interested in engaging economists
who lean far in other directions. :-) I have been lurking on this list for
two months now, and now want to politely ask one question.
What do progressive economists think of how well speculative markets
aggregate information, relative to feasible alternatives? One might
reasonably complain that stock and other financial markets reflect an
obscene concentration of wealth, work in the service of profits not people,
and waste more in useless casino speculation than they help in allocating
real capital.
Nonetheless, one might also grant that such markets seem to do a good job at
aggregating information into prices. Yes, speculators suffer from herding,
beauty contests, and bubbles, perhaps especially regarding long-term
aggregate price movements. But one might still be impressed by the accuracy
and timeliness of, for example, the Iowa Electronic Markets
(http://www.biz.uiowa.edu/iem/) at predicting election results.
Can progressive economists identify some other specific social institution
that they believe does better at aggregating information, and which hence
consistently makes more accurate timely estimates of things like who will
win an election or a horse race? Or do most progressive economists grant
that, whatever their other failings, such betting markets do reasonably
well in terms of producing accurate timely estimates, at least if we set
aside long-term aggregate price movements?
Robin Hanson [EMAIL PROTECTED] http://hanson.gmu.edu
Asst. Prof. Economics, George Mason University
MSN 1D3, Carow Hall, Fairfax VA 22030-4444
703-993-2326 FAX: 703-993-2323
