How Not to Bet

Tim Harford writes of bets:

Pundits who make wagers may look grubby but at least they are accepting a cost for failure. A more subtle advantage is that betting encourages forecasts that are specific and quantifiable.

Exactly, but not all bets are well considered. Consider the following from Christopher Keating:

I have heard global warming skeptics make all sorts of statements about how the science doesn’t support claims of man-made climate change. I have found all of those statements to be empty and without any kind of supporting evidence. I have, in turn, stated that it is not possible for the skeptics to prove their claims. And, I’m willing to put my money where my mouth is.

I am announcing the start of the $10,000 Global Warming Skeptic Challenge. The rules are easy:

1. I will award $10,000 of my own money to anyone that can prove, via the scientific method, that man-made global climate change is not occurring;

…5. I am the final judge of all entries but will provide my comments on why any entry fails to prove the point.

This is a poorly constructed bet. Notice first that the preamble, “empty”, “without any kind of supporting evidence”, “prove,” is simply unscientific bluster. Scientific thinking is Bayesian. (Appropriately, I first saw Keating’s bet flagged on the blog Prior Probability.) In contrast, this talk is suggestive of someone who doesn’t weigh evidence, a point of some importance given that he writes “I am the final judge of all entries…”. Keating is really betting that no one will change his mind and that’s not a bet that I would want to take.

Second, what counts as proof? And what does it mean to say that man-made global climate change is not occurring. How much is man made? How fast is it occurring? What are the costs? What are the benefits? Keating’s challenge is vague and poorly worded.

For an example of a much better bet consider the Caplan-Bauman bet on temperature change over the next 15 years. Caplan has agreed to pay Bauman $333.33 if the average temperature over the period 2015-2029 is more than .05C greater than the average temperature over 2000-2014 as measured by the National Climatic Data Center. If the average temperature increase over that time frame is less than .05c then Bauman will pay Caplan $1000. 

The Caplan-Bauman bet is quantifiable and specific and it contains odds, as it should since Bauman expresses much greater certainty in his belief than Caplan.

Keating seems even more certain in his beliefs than Bauman. But how certain? Will he accept my offer of the same bet at 5:1 odds?


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