The wisdom of crowds is no match for the whims of the Holy Spirit. This week, the ascension of the first American pope surprised many, including the theoretically neutral online betting sites Polymarket and Kalshi. The sites, which allow people to wager on the outcomes of various events, brand themselves as “prediction markets” on the theory that when there’s money on the line, they are better, in aggregate, at anticipating results. While they’ve had some successes — notably, they bested traditional polls at predicting Donald Trump’s 2024 election win — the market for betting on the next pope was blindsided by the conclave’s election of Chicago native Robert Prevost, now Pope Leo XIV. Before the white smoke went up, Kalshi and Polymarket both cast Prevost as a long shot, with odds between 1% and 2%, which means a handful of gamblers who bet on Prevost won big. On Polymarket, one user turned a bet of a little over $1,000 into a $63,683 profit, according to the site’s public ledger. Betting markets allow you to wager on just about anything and have a mixed record of “predicting” outcomes. While they called the 2024 election correctly, they notably fumbled in 2016, when the “smart money” suggested British voters would reject “Brexit” and that Hillary Clinton would defeat Donald Trump. The conclave markets’ big miss this week reflects the limits of their predictive powers. In sports betting, you’ve got thousands of data points about individual athletes, team stats going back decades and any number of informed opinions from professional commentators. Political winds can be volatile, but polling and voter data are practically endless at the national level. In pope betting, the data are far more scarce. “The papal conclave markets are one of the ones that you’d expect to be the least well-calibrated since they only get a data point every decade or two,” Eric Zitzewitz, professor of economics at Dartmouth College, told CNN. “And the process is much more opaque than almost any other political selection process… No tell-all memoirs, even well after the fact.” Plenty of academics and journalists offered insights into who might be among the favorites based on their various CVs and reputations in the church. Pietro Parolin and Luis Antonio Tagle were among the favorites heading into the conclave on Wednesday. And, as election forecaster Nate Silver noted Friday, Parolin’s chances shot up as the white smoke emerged, “presumably on the assumption that the quick decision was good news for the frontrunners.” Of course, the dynamics inside the Sistine Chapel were impossible for market participants to gauge from the outside. All any of us regular people could do was watch “Conclave” and, based on the movie, assume there’s plenty of drama and shifting allegiances. Bottom line: Even in a highly liquid market, which crowd-wisdom theory holds should be more accurate, there are simply no tools to measure what Catholics believe is the spirit of God guiding the cardinals’ choice. “The Holy Spirit is indeed a wily one,” Zitzewitz said.
Why prediction markets failed to see the American pope coming
TruthLens AI Suggested Headline:
"Prediction Markets Misjudge Papal Election of First American Pope"
CNN
7.6
TruthLens AI Summary
The recent election of Robert Prevost as the first American pope, now known as Pope Leo XIV, took many by surprise, including prediction markets like Polymarket and Kalshi. These platforms, which allow users to bet on the outcomes of various events under the premise that collective betting can yield better predictions, underestimated Prevost's chances significantly, assigning him odds between 1% and 2%. This miscalculation led to substantial financial gains for a few astute bettors; one individual reportedly transformed a wager of just over $1,000 into a profit of nearly $63,700. While these prediction markets have sometimes outperformed traditional polling, such as in the case of the upcoming 2024 election, they have also faltered in the past, notably misjudging the outcomes of the Brexit vote and the 2016 U.S. presidential election. The recent papal conclave's unexpected result highlights the limitations of prediction markets in scenarios where data is scarce and the processes are shrouded in secrecy.
Eric Zitzewitz, an economics professor at Dartmouth College, emphasized that the papal conclave markets are particularly challenging due to the infrequency of such elections, which occur only every decade or two. Unlike political elections or sports events, where extensive historical data and statistical analysis can inform predictions, the selection of a pope lacks such resources. The opaque nature of the conclave process makes it difficult for market participants to gauge the internal dynamics at play, leading to erroneous assumptions about frontrunners. While there were educated guesses based on the candidates' backgrounds and reputations, the unpredictable influence of the Holy Spirit, which many Catholics believe guides the cardinals in their decision-making, complicates any attempt at forecasting. As Zitzewitz aptly noted, the unpredictability of the Holy Spirit renders traditional predictive tools ineffective in such unique circumstances.
TruthLens AI Analysis
The article explores the unexpected election of the first American pope, Robert Prevost, highlighting the limitations of prediction markets in forecasting such unique events. Despite their reputation for accuracy in predicting certain political outcomes, these markets failed to anticipate this historic moment, illustrating the challenges of predicting outcomes in environments with sparse data.
Analysis of Prediction Markets
The prediction markets, namely Polymarket and Kalshi, aimed to aggregate individual bets to forecast outcomes more accurately than traditional polls. However, the election of Pope Leo XIV has exposed the weak predictive power of these platforms in situations lacking substantial historical data. Unlike political or sports events, which have abundant data points, papal elections occur infrequently, making accurate predictions difficult. This discrepancy raises questions about the reliability of prediction markets in less conventional forecasting scenarios.
Public Perception and Expectations
The article intends to shape public understanding regarding the unpredictability of certain events, emphasizing that not all outcomes can be effectively anticipated, even by crowdsourced betting systems. It suggests that while these markets can provide insights in some areas, they are not infallible, particularly in domains like religious leadership that lack clear statistical data. This could lead to a more cautious approach among bettors and the public towards these prediction platforms.
Potential Information Gaps
While the article does not imply any deliberate concealment of information, it does suggest that the public might not fully understand the limitations of prediction markets. By focusing on their recent failures, there may be an underlying message that highlights the need for critical assessment of such platforms, rather than accepting their predictions at face value.
Manipulative Aspects
The framing of the article may carry a subtle manipulative tone, as it emphasizes the failure of prediction markets to predict a significant event, potentially undermining their credibility. By discussing the large profits made by a few bettors who wagered on Prevost, the article could evoke a sense of envy or skepticism among readers regarding the reliability and fairness of these markets.
Comparative Context
When compared to other news articles discussing political predictions or financial markets, this piece seems to highlight the unique challenges faced by prediction markets in the context of religious events. This comparison may serve to reinforce the idea that not all forecasting methods are universally applicable, thereby fostering a more nuanced view of prediction markets.
Impact on Society and Economy
The implications of this news on society could include a decreased trust in prediction markets, which might affect their usage in future events. Economically, reduced betting activity could impact the revenue of these platforms. Politically, it may lead to increased scrutiny of data and prediction methods across various sectors.
Target Audiences
The article seems to resonate more with audiences interested in politics, economics, and betting markets. It could also appeal to individuals curious about the intersection of technology and traditional institutions, such as the papacy.
Market Effects
While the immediate impact on stock markets or financial sectors may be minimal, the article could influence investor sentiment towards prediction markets and their perceived reliability. Companies associated with betting or predictive analytics might experience fluctuations based on public perception shaped by this news.
Global Power Dynamics
The election of an American pope does hold significance in terms of global power dynamics within the Catholic Church, potentially affecting international relations and the Church’s influence in various regions. It reflects broader societal trends regarding leadership and representation in global institutions.
Use of AI in Writing
It is possible that AI tools were employed in crafting this article, particularly for data analysis or to synthesize information. Certain phrases or structuring might suggest AI involvement, especially in presenting statistical data or trends.
In conclusion, while the article is grounded in factual reporting, it also carries implications regarding the reliability of prediction markets and their limitations in forecasting unique events. The overall reliability of the content appears solid, but the nuanced framing may influence public perception in a specific direction.