Thinking Analytically

As a Freakonomics fan, I can’t help but be intrigued by the “freakquel” available for pre-order on Amazon.

SuperFreakonomics challenges the way we think all over again, exploring the hidden side of everything with such questions as:

• How is a street prostitute like a department-store Santa?
• Why are doctors so bad at washing their hands?
• How much good do car seats do?
• What’s the best way to catch a terrorist?
• Did TV cause a rise in crime?
• What do hurricanes, heart attacks, and highway deaths have in common?
• Are people hard-wired for altruism or selfishness?
• Can eating kangaroo save the planet?
• Which adds more value: a pimp or a Realtor?

I’ve ordered my copy. You?

On the Freakonmics blog, Justin Wolfers discusses some of the progress made related to the adoption of prediction markets in the US. Like many innovative ideas, progress can be stalled through legal hurdles. Wolfers’ asks:

Are prediction markets legitimate business tools, an alternative set of securities markets requiring SEC regulation, illegal betting markets, allowable games of skill, or something else altogether?

That’s a meaty question if there ever was one. Wolfers’ goes on to describe actions taken by the Commodity Futures Trading Commission to help sort it out including determining whether or not the markets fall into their jurisdiction.

The Freakonmics blog has teamed up with Predictify to offer a prediction market for their readers. Using Freakonmics-related freebies as incentives, participants weigh in with their own predictions and see how they stack up compared to other predictions and eventually, reality. Find the center here.

Guest poster, Justin Wolfers, said a few words recently on the Freakonmics blog about prediction markets at Google.  I found the linked Googleblog post, “Putting crowd wisdom to work” quite interesting as it described how Google was “walking their own mission talk”…

At Google, we’re constantly trying to find new ways to organize the world’s information, including information relevant to our business.

This article describes how Google uses prediction markets to forcast product launch dates and other important strategic events.  What struck me about the more recent Freakonomics post, however, is that the question changed:

So we decided to move beyond asking, “Do prediction markets work?” and instead use them as a tool for better understanding how information flows within a (very cool) corporation. Information is terrific to theorize about, but hard to measure. That’s where the prediction market is useful: if you and I trade similarly on a market, then we can infer that you share similar information.

Yes!  It’s all in the asking the right questions.  How often have we improved our understanding of a system or event, just by asking the questions from a different perspective?

You know you are a analytical, statistical or economic geek when you analyze the probabilities related to the game Monopoly! See these sites for related articles and tips. Freakonomics blog, fool proof strategy, and probabilities related to the game.

Don’t have the game? You should!