Sunday, 11 November 2012

Wisdom of the Crowd

Odds of the election out come set by betting on the Iowa Election Market 
There are two stories about the 2012 election forming.  On one hand is the story about how Romney and his people thought for sure they had a landslide coming. This story is about the intentional ignorance and denial of ruling elites.  It is a story we are familiar with over the past 10 years, where time and time again our political and government elites have been caught by surprise by events from Iraq to Wall Street.

Gallup and other major polling services utterly failed to predict the outcome despite and extensive resources and skills.
According to this narrative the Romney failure to understand what what about to happen is another case of shell shocked experts taken by surprise by reality. 

One is about Nate Silver and the rise of Big Data science. Nate Silver, and other Data Scientists working at a few polling services and for the Obama team were able to apply difficult statistical science to form a more accurate idea of the political landscape.

According to this narrative the success is a accomplishment of a small number of elites with access to massive amounts of Big Data, much of it proprietary, and elite skills of analysis. 

But if you look at a wisdom of the crowd site like the Iowa Election Market where thousands of ordinary people place bets on the outcome of the election. These crowd sites did a far better job of predicting the the outcome than the Romney organisation or the major polling services, especially Gallup Poll who utterly failed.

The bets of ordinary users at the Iowa Election market gave a far better picture of the likely outcomes of the election than Gallup poll.
So here is a narrative that is being ignored.  The ordinary crowd betting on Iowa Election Market did a far better job calling the election than Gallup Poll.  Nate Silver did good, but he didn't do much better than ordinary crowd sources betting sites in setting the odds.

It is critical that this success of the wisdom of the crowd not be ignored as worthy praises is layered on Data Science and Nate Silver. 

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