politics & elections

The power of prediction markets

Curated on October 20, 2016August 3, 2018 by Stefaan Verhulst

Adam Mann in Nature: “It was a great way to mix science with gambling, says Anna Dreber. The year was 2012, and an international group of psychologists had just launched the ‘Reproducibility Project’ — an effort to repeat dozens of psychology experiments to see which held up¹. “So we thought it would be fantastic to bet on the outcome,” says Dreber, who leads a team of behavioural economists at the Stockholm School of Economics.

In particular, her team wanted to see whether scientists could make good use of prediction markets: mini Wall Streets in which participants buy and sell ‘shares’ in a future event at a price that reflects their collective wisdom about the chance of the event happening. As a control, Dreber and her colleagues first asked a group of psychologists to estimate the odds of replication for each study on the project’s list. Then the researchers set up a prediction market for each study, and gave the same psychologists US$100 apiece to invest.

When the Reproducibility Project revealed last year that it had been able to replicate fewer than half of the studies examined², Dreber found that her experts hadn’t done much better than chance with their individual predictions. But working collectively through the markets, they had correctly guessed the outcome 71% of the time³.

Experiments such as this are a testament to the power of prediction markets to turn individuals’ guesses into forecasts of sometimes startling accuracy. That uncanny ability ensures that during every US presidential election, voters avidly follow the standings for their favoured candidates on exchanges such as Betfair and the Iowa Electronic Markets (IEM). But prediction markets are increasingly being used to make forecasts of all kinds, on everything from the outcomes of sporting events to the results of business decisions. Advocates maintain that they allow people to aggregate information without the biases that plague traditional forecasting methods, such as polls or expert analysis….

Prediction markets have also had some high-profile misfires, however — such as giving the odds of a Brexit ‘stay’ vote as 85% on the day of the referendum, 23 June. (UK citizens in fact narrowly voted to leave the European Union.) And prediction markets lagged well behind conventional polls in predicting that Donald Trump would become the 2016 Republican nominee for US president.

Such examples have inspired academics to probe prediction markets. Why do they work as well as they do? What are their limits, and why do their predictions sometimes fail?…(More)”

Knowledge – Is Knowledge Power?

Curated on October 16, 2016August 3, 2018 by Stefaan Verhulst

Book by Marian Adolf and Nico Stehr: “As we move through our modern world, the phenomenon we call knowledge is always involved. Whether we talk of know-how, technology, innovation, politics or education, it is the concept of knowledge that ties them all together. But despite its ubiquity as a modern trope we seldom encounter knowledge in itself. How is it produced, where does it reside, and who owns it? Is knowledge always beneficial, will we know all there is to know at some point in the future, and does knowledge really equal power? This book pursues an original approach to this concept that seems to define so many aspects of modern societies. It explores the topic from a distinctly sociological perspective, and traces the many ways that knowledge is woven into the very fabric of modern society….(More)”

For Better Citizenship, Scratch and Win

Curated on October 11, 2016May 29, 2019 by Stefaan Verhulst

Tina Rosenberg in the New York Times: “China, with its largely cash economy, has a huge problem with tax evasion. Not just grand tax evasion, but the everyday “no receipt, please” kind, even though there have been harsh penalties: Before 2011, some forms of tax evasion were even punishable by death.

The country needed a different approach. So what did it do to get people to pay sales tax?
A. Hired a force of inspectors to raid restaurants and stores to catch people skipping the receipt, accompanied by big fines and prison terms.
B. Started an “It’s a citizen’s duty to denounce” exhortation campaign.
C. Installed cameras to photograph every transaction.
D. Turned receipts into scratch-off lottery games.

One of these things is not like the other, and that’s the answer: D. Instead of punishing under-the-table transactions, China wisely decided to encouragelegal transactions by starting a receipt lottery. Many places have done this — Brazil, Chile, Malta, Portugal, Slovakia and Taiwan, among others. In Taiwan, for example, every month the tax authorities post lottery numbers; match a few numbers for a small prize, or all of them to win more than $300,000.

China took it further. Customers need not store their receipts and wait until the end of the month to see if they’ve won money. Gratification is instant: Each receipt, known as a fapiao, is a scratch-off lottery ticket. People still game the system, but much less. The fapiao system has greatly raised collections of sales tax, business income tax and total tax. And it’s cheap to administer: one study found that new tax revenue totaled 30 times (PDF) the cost of the lottery prizes.

When a receipt is a lottery ticket, people ask for a receipt. They hope to get money, but just as important, they like to play games. Those axioms apply around the globe.

“We have groups that say: we can give out an incentive to our customers worth $15,” said Aron Ezra, chief executive of OfferCraft, an American company that designs games for businesses. “They could do that and have everyone get an incentive for $15. But they’d get better results for the same average price by having variability — some get $10, some get $100.” The lottery makes it exciting.

The huge popularity of lotteries shows this. Another example is the Save to Win program, which credit unions are using in seven states. Microscopic interest rates weren’t enough to get low-income customers to save. So instead, for every $25 they put into a savings account, depositors get one lottery entry. They can win a grand prize — in some states, $10,000 — or $100 prizes every month.

What else could lotteries do?

Los Angeles and Philadelphia have been the sites of experiments to increase dismal voter turnout in local elections by choosing a voter at random to win a large cash prize. In May 2015, the Southwest Voter Registration Education Project in Los Angeles offered $25,000 to a random voter in one district during a school board election, in a project named Voteria.

Health-related lotteries aren’t new. In 1957, Glasgow held a mass X-ray campaign to diagnose tuberculosis. Health officials aimed to X-ray 250,000 people and in the end got three times that many. One reason for the enthusiasm: a weekly prize draw. A lovely vintage newsreel reported on the campaign.

More than 50 years later, researchers set up a lottery among young adults in Lesotho, designed to promote safe sex practices. Every four months the subjects were tested for two sexually transmitted diseases, syphilis and trichonomiasis. A negative test got them entered into a lottery to win either $50 (equivalent to a week’s average salary) or $100. The idea was to see if incentives to reduce the spread of syphilis would also protect against HIV.

The results were significant — a 21.4 percent reduction in the rate of new H.I.V. infections, and a 3.4 percent lower prevalence rate of HIV in the treatment group after two years. And the effect was lasting — the gains persisted a year after the experiment ended. The lottery worked in large part because it was most attractive to those most at risk: many people who take sexual risks also enjoy taking monetary risks, and might be eager to play a lottery.

The authors wrote in a blog post: “To the best of our knowledge, this is the first H.I.V. prevention intervention focusing on sexual behavior changes (as opposed to medical interventions) to have been demonstrated to lead to a significant reduction in H.I.V. incidence, the ultimate objective of any H.I.V. prevention intervention.”…(More)”

Participatory Budgeting in the United States: A Guide for Local Governments

Curated on October 11, 2016October 24, 2018 by Stefaan Verhulst

Book by Victoria Gordon, Jeffery L. Osgood, Jr., Daniel Boden: “Although citizen engagement is a core public service value, few public administrators receive training on how to share leadership with people outside the government.Participatory Budgeting in the United States serves as a primer for those looking to understand a classic example of participatory governance, engaging local citizens in examining budgetary constraints and priorities before making recommendations to local government. Utilizing case studies and an original set of interviews with community members, elected officials, and city employees, this book provides a rare window onto the participatory budgeting process through the words and experiences of the very individuals involved. The central themes that emerge from these fascinating and detailed cases focus on three core areas: creating the participatory budgeting infrastructure; increasing citizen participation in participatory budgeting; and assessing and increasing the impact of participatory budgeting. This book provides students, local government elected officials, practitioners, and citizens with a comprehensive understanding of participatory budgeting and straightforward guidelines to enhance the process of civic engagement and democratic values in local communities….(More)”

The Architecture of Innovation

Curated on October 6, 2016May 29, 2019 by Stefaan Verhulst

Hollie Russon Gilman, and Jessica Gover at the Beeck Center: “Technology is transforming how we live our lives—from new solutions in health, education, defense, and beyond. The private sector provides user-centric, digital, customer-oriented solutions—in real time. We should expect the same from government. The government needs to evolve to keep up with these rapid changes in technology and data use. We need a government that is nimble and adaptive to change. More importantly, we need to create a culture within government that allows for a culture of innovation that leads to outcomes. At the same time, innovation—new technologies, data, and partnerships—have also triggered a need for rapid change in governance and public policy. With the election only a month away, the next president has the opportunity to pivot—to adopt a governance structure that proactively drives change and delivers results.

Today, we are thrilled to announce the release of our latest publication, “The Architecture of Innovation: Institutionalizing Innovation in Federal Policymaking,” produced in partnership with The Massive Data Institute at Georgetown University’s McCourt School of Public Policy. The report provides recommendations for how the next administration can pilot, iterate, and scale innovative approaches to more effectively serve the needs of the American people. “The Architecture of Innovation” offers recommendations for how government can structurally organize for change at the highest levels to not only adapt and meet the challenges of today, but also anticipate and meet the needs of tomorrow.

We are launching the report today at our Fall convening, Data for Social Good: Innovation in the Next Administration. The report launch will be bookended by a fireside chat retrospective on innovation in the Obama Administration and a panel discussing innovation in past, present, and future administrations.

As presidential transition teams on both sides are building out their plans for the next administration, they have an unprecedented opportunity to maximize and grow the strides made by the Obama administration to create impactful change. For federal policymaking to create lasting outcomes, we believe that creating a holistic culture of innovation in government is the key to solving some of our biggest civic challenges. We hope that our report and today’s convening will provide a helpful roadmap as to best organization for innovation in government for 2016 and beyond…(More)”

Lessons Learned Implementing Bold Ideas

Curated on October 4, 2016August 3, 2018 by Stefaan Verhulst

Anne Emig at Bloomberg Philanthropies: “Since 2013, hundreds of cities around the world have competed in Bloomberg Philanthropies’ Mayors Challenge by proposing bold new ideas that solve urban challenges, improve city life – and have the potential to spread….

Today, we released a report that offers important advice from the winning cities to municipalities looking to bring bold ideas to life. In summary, the lessons are:

Playing Politics:

The bigger and bolder the idea, the more political support is needed to make it happen. However, city administrations change, re-election campaigns can shift priorities, and political atmospherics in general are challenging. This makes it all the more important for innovators to understand the political space they are working in and try to be inclusive in forming alliances and relationships that can support their case.

Support Can Come from Anywhere:

Political approval is great, but so are resources from outside government. Cities should capitalize on the energy surrounding innovative projects and bring on board a diversity of organizations and people who can offer advice, make introductions, provide funding, and advocate on behalf of the city.

Managing Internal Affairs:

Innovation leaders know they have to manage up – but they also must skillfully engage their peers in order to succeed. In particular, middle managers are crucial to successfully implementing bold new ideas, so their buy-in must be earned. Taking the time to create enthusiasm for a new strategy among middle managers and helping them understand how a successful rollout is not just good for end-users, but good for them and their career as well, will pay dividends in the long run.

The Right Team for the Job:

A team that excels in producing a framework for a bold new idea may not be the perfect team to actually implement it. Understanding the team’s strengths and weaknesses and how individuals fit together as a whole is essential to bringing an idea to life. Passionate and visionary leaders also need comrades with common sense skills who can simply get things done.

Keeping Eyes on the Prize:

It’s critical to create a compelling narrative that sustains the attention and enthusiasm of government workers and the public. The winning teams constantly reminded their colleagues that the day-to-day tasks and deliverables were all in pursuit of a higher and larger goal; nothing less than changing the world, if only a little at a time. It’s that kind of powerful and ambitious narrative that builds passion and brings out the best in people….(More)”

Behavioral Economics and Fed Policymaking

Curated on September 27, 2016October 23, 2018 by Stefaan Verhulst

Essay by Mark A. Calabria in Cato Journal: “Behavioral economics has continued to gain momentum in challenging the standard rational actor model in economics. With a few exceptions, the emphasis has been on the cognitive failure of individuals outside of government. Niclas Berggren (2013: 200) estimates that 95.5 percent of behavioral economics articles in the leading economics journals do not contain an analysis of the cognitive ability of policymakers. In this article, I offer a preliminary analysis of potential cognitive failures in the Federal Reserve’s conduct of monetary policy. Proposals to “debias” monetary policymaking are offered, along with a discussion of how the Fed’s existing institutional structure ameliorates or exasperates potential biases…(More)”

Civic political engagement and social change in the new digital age

Curated on September 18, 2016August 3, 2018 by Stefaan Verhulst

Koc-Michalska, K. and Vedel, T. in new media & society: “Over recent decades, research on the Internet and political participation has substantially developed, from speculative studies on possible impacts in social and economic life to detailed analyses of organizational usage. In the field of politics, focus is increasingly shifting from understanding organizational, or supply side, to the usage and dimension of citizen engagement. Citizens have various ways to engage in civic political life, with many new forms of engagement facilitated by digital technologies. The question is to what extent these forms of engagement have any impact on society and the way society is governed. More particularly, what forms of engagement have impact, what type of impact is evidenced, is that impact positive or negative, in what ways, and for whom? Phrasing the question in this way recognizes that citizen engagement can have a range of differing impacts, in multifaceted forms, and these impacts may not always be positive for broader society.

Civic political engagement is at the center of political science research, especially concentrating on voting behavior and what are described as traditional forms of political participation: demonstrating, contacting elected representatives, or joining political organizations. While these remain core to democratic society, debates are emerging surrounding new forms of participation offered by new digital wave era technologies. In particular, should we recognize actions facilitated by the participatory opportunities offered by new communication platforms (such as social networks and microblogs) as forms of political participation? The US election campaigns of 2008 and 2012, and Barack Obama’s engagement with interactive communication and empowerment of citizens through his campaigning strategy, has led to new thinking around how political communication can be performed. Obama’s campaign happened against a backdrop of activism among those Karpf (2012) describes as “Internet-mediated issue generalists”: citizens who populate forums, contribute to blogs, and initiate petitions. Data suggest that the mechanisms for facilitating political participation are evolving alongside technological innovations….(More)”

Artificial intelligence is hard to see

Curated on September 13, 2016August 20, 2018 by Stefaan Verhulst

Kate Crawford and Meredith Whittaker on “Why we urgently need to measure AI’s societal impacts“: “How will artificial intelligence systems change the way we live? This is a tough question: on one hand, AI tools are producing compelling advances in complex tasks, with dramatic improvements in energy consumption, audio processing, and leukemia detection. There is extraordinary potential to do much more in the future. On the other hand, AI systems are already making problematic judgements that are producing significant social, cultural, and economic impacts in people’s everyday lives.

AI and decision-support systems are embedded in a wide array of social institutions, from influencing who is released from jail to shaping the news we see. For example, Facebook’s automated content editing system recently censored the Pulitzer-prize winning image of a nine-year old girl fleeing napalm bombs during the Vietnam War. The girl is naked; to an image processing algorithm, this might appear as a simple violation of the policy against child nudity. But to human eyes, Nick Ut’s photograph, “The Terror of War”, means much more: it is an iconic portrait of the indiscriminate horror of conflict, and it has an assured place in the history of photography and international politics. The removal of the image caused an international outcry before Facebook backed down and restored the image. “What they do by removing such images, no matter what good intentions, is to redact our shared history,” said the Prime Minister of Norway, Erna Solberg.

It’s easy to forget that these high-profile instances are actually the easy cases. As Tarleton Gillespie has observed, hundreds of content reviews are occurring with Facebook images thousand of times per day, and rarely is there a Pulitzer prize to help determine lasting significance. Some of these reviews include human teams, and some do not. In this case, there is alsoconsiderable ambiguity about where the automated process ended and the human review began: which is part of the problem. And Facebook is just one player in complex ecology of algorithmically-supplemented determinations with little external monitoring to see how decisions are made or what the effects might be.

The ‘Terror of War’ case, then, is the tip of the iceberg: a rare visible instance that points to a much larger mass of unseen automated and semi-automated decisions. The concern is that most of these ‘weak AI’ systems are making decisions that don’t garner such attention. They are embedded at the back-end of systems, working at the seams of multiple data sets, with no consumer-facing interface. Their operations are mainly unknown, unseen, and with impacts that take enormous effort to detect.

Sometimes AI techniques get it right, and sometimes they get it wrong. Only rarely will those errors be seen by the public: like the Vietnam war photograph, or when a AI ‘beauty contest’ held this month was called out for being racist for selecting white women as the winners. We can dismiss this latter case as a problem of training data — they simply need a more diverse selection of faces to train their algorithm with, and now that 600,000 people have sent in their selfies, they certainly have better means to do so. But while a beauty contest might seem like a bad joke, or just a really good trick to get people to give up their photos to build a large training data set, it points to a much bigger set of problems. AI and decision-support systems are reaching into everyday life: determining who will be on a predictive policing‘heat list’, who will be hired or promoted, which students will be recruited to universities, or seeking to predict at birth who will become a criminal by the age of 18. So the stakes are high…(More)”