Short answer, as someone who lives in California, as to why I didn’t run:
45% Same situation as DonyChristie
45% Running for office is difficult when the majority of your time is spent trying to get bare minimum survival needs met. This is something many Californians struggle with, so I would let go of the 5th largest economy being a positive thing.
10% I’m not sure being Governor of California would be the best way for me personally to contribute to the world as an EA at this point in my life and this point in US history. I wouldn’t be a good candidate.
I am part of the Run for Something mailing/notification list so when I get my feet back on the ground I could try giving it a go. I’m not sure how involved they are specifically with EA.
Some other factors to take into consideration are culture and politics of California. I have thought of the possibility that if someone were an EA and wanted to run for office AND win, they may have to hide the fact that they are an EA, because people don’t want solutions. There are many many reasons for this. Too many for one post.
This is my first post, so I probably broke some guidelines. I wish I had a better way of explaining.
I think you’re right that its hard to run for positions but I don’t think the cost should be borne by individuals. I think if it cost 1 million to have a 5% chance of governor of California then I would call that effective spending.
I suggest that I’ve not yet heard why an EA org shouldn’t have been willing to spend a million here
I’ll give it a go: Predictit is illiquid and has roughly a 10% margin of error because of the transaction costs. 5% withdrawal fee (on the gross amount), plus 10% of any profits, plus of course the taxes you’d have to pay.
If I think Paffrath’s chance is actually 0, and he’s at 11, do I buy no on Paffrath for 89 cents? At most I’d win 11. Then I lose 6.1 on the fees. Then I lose ~1 on the taxes (and if I lose money instead, I can’t deduct it on my taxes). So for my 11 cents of nominal gain I only end up with 3.9. This is for keeping my money locked up for months in advance, when I might be able to make bigger profits elsewhere with the same amount of risk (this does imply predictions closer to the election would tend to be more accurate, since my opportunity cost of locking up the money is lower and it’s more worth making such a bet. But it’s also a lot harder for a prospective candidate to use this info). The $850 limit also limits how much money I can make, especially on a bet that is already rated as pretty likely to win, so if my time is sufficiently valuable that is also a consideration.
And, thinking about this in more detail, Predictit’s fee structure actually dis-incentivizes bidding down longshots more than bidding them up. If it has him at 11 and I think his chances are really 22, what happens if I buy the yes on Paffrath contract? My expected value without fees and taxes is 11 cents. But really there’s a bifurcated scenario. If I lose, I lose it all and, pay no fees. If I win, I pay 5% on my 100 cent withdrawal, plus 10% on my 89 cent winnings, for a total of 13.9. Plus taxes of ~19. So I keep roughly 56 cents out of my 89 cent winnings. So my real expected value is 63% of the gross expected value of the trade, vs. the only ~35% of gross expected value on the No bet. Further, my ability to get enough return to make it worth my time is higher. If I put $850 onto the No side at 89 cents, and I win, I get 850*100/89-850=~$105 in gross profits (of which I will then get to keep 35%). If I bet $850 on the yes side, and he actually wins, I get 850*100/11-850=~$7727. Even adjusting for my probability estimate only being 22%, I get $850 in expectation (of which I keep 63%). So my estimate of my true expected value of making the bet is $37 if I think the market has him rated 11 percentage points too high, or $536 if I think the market has him rated 11 percentage points too low.
This is very different than how e.g. the stock market works. There, the returns to being smarter than the market in either direction are symmetrical. If I think an $11 stock is really worth 22, I can buy it and make $11 (and assuming I meet the requirements, can get a margin loan from my broker and have an initial expense of only $5.5, then pay the rest when I sell the stock, so I make $11 on a $5.5 investment. Similarly, if I think an $11 stock is really worth 0, and I meet the brokerage’s requirements for margin trading, I can short sell as much as I want at the $11 price, by putting up a margin amount to cover my risk of loss (usually 50% of the value of the trade), then if I am right, buy the stock at $0 later to cover my trade. So If I short sell $11 of the stock and it goes to 0, my initial investment is $5.5 and I have made $11, the same as if I correctly predicted it was underpriced.
If Predictit has him at 20%, there’s at least a little something to that. But 10% has a high enough probability of being noise that I’d trust the conventional metrics over that.
Edited because some of my original example math made no sense in light of the actual mechanics of Predictit, and thinking through the mechanics added new insight.
Short answer, as someone who lives in California, as to why I didn’t run:
45% Same situation as DonyChristie
45% Running for office is difficult when the majority of your time is spent trying to get bare minimum survival needs met. This is something many Californians struggle with, so I would let go of the 5th largest economy being a positive thing.
10% I’m not sure being Governor of California would be the best way for me personally to contribute to the world as an EA at this point in my life and this point in US history. I wouldn’t be a good candidate.
I am part of the Run for Something mailing/notification list so when I get my feet back on the ground I could try giving it a go. I’m not sure how involved they are specifically with EA.
Some other factors to take into consideration are culture and politics of California. I have thought of the possibility that if someone were an EA and wanted to run for office AND win, they may have to hide the fact that they are an EA, because people don’t want solutions. There are many many reasons for this. Too many for one post.
This is my first post, so I probably broke some guidelines. I wish I had a better way of explaining.
Nah your post is fine. Welcome to the forum.
I think you’re right that its hard to run for positions but I don’t think the cost should be borne by individuals. I think if it cost 1 million to have a 5% chance of governor of California then I would call that effective spending.
I suggest that I’ve not yet heard why an EA org shouldn’t have been willing to spend a million here
I’ll give it a go: Predictit is illiquid and has roughly a 10% margin of error because of the transaction costs. 5% withdrawal fee (on the gross amount), plus 10% of any profits, plus of course the taxes you’d have to pay.
If I think Paffrath’s chance is actually 0, and he’s at 11, do I buy no on Paffrath for 89 cents? At most I’d win 11. Then I lose 6.1 on the fees. Then I lose ~1 on the taxes (and if I lose money instead, I can’t deduct it on my taxes). So for my 11 cents of nominal gain I only end up with 3.9. This is for keeping my money locked up for months in advance, when I might be able to make bigger profits elsewhere with the same amount of risk (this does imply predictions closer to the election would tend to be more accurate, since my opportunity cost of locking up the money is lower and it’s more worth making such a bet. But it’s also a lot harder for a prospective candidate to use this info). The $850 limit also limits how much money I can make, especially on a bet that is already rated as pretty likely to win, so if my time is sufficiently valuable that is also a consideration.
And, thinking about this in more detail, Predictit’s fee structure actually dis-incentivizes bidding down longshots more than bidding them up. If it has him at 11 and I think his chances are really 22, what happens if I buy the yes on Paffrath contract? My expected value without fees and taxes is 11 cents. But really there’s a bifurcated scenario. If I lose, I lose it all and, pay no fees. If I win, I pay 5% on my 100 cent withdrawal, plus 10% on my 89 cent winnings, for a total of 13.9. Plus taxes of ~19. So I keep roughly 56 cents out of my 89 cent winnings. So my real expected value is 63% of the gross expected value of the trade, vs. the only ~35% of gross expected value on the No bet. Further, my ability to get enough return to make it worth my time is higher. If I put $850 onto the No side at 89 cents, and I win, I get 850*100/89-850=~$105 in gross profits (of which I will then get to keep 35%). If I bet $850 on the yes side, and he actually wins, I get 850*100/11-850=~$7727. Even adjusting for my probability estimate only being 22%, I get $850 in expectation (of which I keep 63%). So my estimate of my true expected value of making the bet is $37 if I think the market has him rated 11 percentage points too high, or $536 if I think the market has him rated 11 percentage points too low.
This is very different than how e.g. the stock market works. There, the returns to being smarter than the market in either direction are symmetrical. If I think an $11 stock is really worth 22, I can buy it and make $11 (and assuming I meet the requirements, can get a margin loan from my broker and have an initial expense of only $5.5, then pay the rest when I sell the stock, so I make $11 on a $5.5 investment. Similarly, if I think an $11 stock is really worth 0, and I meet the brokerage’s requirements for margin trading, I can short sell as much as I want at the $11 price, by putting up a margin amount to cover my risk of loss (usually 50% of the value of the trade), then if I am right, buy the stock at $0 later to cover my trade. So If I short sell $11 of the stock and it goes to 0, my initial investment is $5.5 and I have made $11, the same as if I correctly predicted it was underpriced.
If Predictit has him at 20%, there’s at least a little something to that. But 10% has a high enough probability of being noise that I’d trust the conventional metrics over that.
Edited because some of my original example math made no sense in light of the actual mechanics of Predictit, and thinking through the mechanics added new insight.