“This development matters because predictions matter.” (Image by John Haslam.)

Plenty of insiders were wrong about the Supreme Court decision regarding the Affordable Care Act, but how did large collections of outsiders do? Not so hot. From David Leonhardt’s analysis at the New York Times of the cooling of prediction markets and what that means:

“With the rumors swirling, I began to check the odds at Intrade, the online prediction market where people can bet on real-world events, several times a day. The odds had barely budged. They continued to show about a 75 percent chance that the law’s so-called mandate would be ruled unconstitutional, right up until the morning it was ruled constitutional.

The market — the wisdom of crowds — turned out to be wrong.

I have since come to think of the court’s ruling as the signature example of the counterattack of the insiders. After the better part of a decade in which various markets, from Intrade to the stock market, became many people’s preferred way to peer into the future, a backlash is clearly under way. Not so long ago, knowing about the existence of Intrade was a mark of being in the vanguard. Today, mocking Intrade, ideally on Twitter, is a sign of sophistication.

This development matters because predictions matter. They allow government officials, corporate executives and citizens to plan for the future. They are an unavoidable part of life.”