Prediction market traders have achieved a breakthrough in probability theory. They now believe there's a 50-50 chance something either happened or didn't happen. Congrats to everyone involved.
The specific revelation concerns August job creation. Half the smart money thinks the economy added more than 50,000 jobs. The other half thinks it didn't. This represents thousands of hours of chart analysis, economic modeling, and Twitter arguments culminating in the same odds you'd get from flipping a quarter you found in your couch.
Fifty thousand jobs, by the way. That's the line in the sand. Not 200,000. Not 100,000. Fifty thousand jobs in an economy with 160 million workers. They're betting on whether we managed to clear a bar so low you'd need a shovel to find it. August could've added the population of a mid-sized Applebee's to the workforce and these guys would be sprinting to their keyboards to move the line.
The beauty of prediction markets is watching people convince themselves they're doing science when they're actually just agreeing with each other in real-time until the number settles at I don't know, could go either way. Then they wait for the data. Then they pretend they saw it coming. Then they do it again next month with different numbers and the same unearned confidence.
Someone actually looked at the August employment data—which doesn't exist yet—and decided the fair value of their uncertainty was exactly fifty percent. Not 49. Not 51. Fifty. They priced in a coin flip, charged a transaction fee, and called it market efficiency.
The job numbers come out Friday. One group will claim they nailed it. The other group will explain why the data was flawed. Both groups will be back next month, riding that 50-50 edge straight to the financial promised land.
Photo by Maxim Hopman on Unsplash
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