More on Terrorist Oddsmaking
Although this thing has already died, I’ve already seen a number of bloggers on the left come out in support of this dumbass idea :
- Most of the criticism seems to focus on its being distasteful or improper to bet on death. But shouldn’t the primary consideration be whether the system actually works? Isn’t it our government’s job to “bet on death” insofar as it allocates military resources based on its evaluation of most dangerous threats to national security? Doesn’t the government “bet on death” when it decides to build more airplanes and fewer tanks, or vice versa? It seems to me that market-based decision making is simply another tool for the government to do what it is already doing – and if it is an effective tool… shouldn’t we be using it?
Why? Because it will add even more data to an intelligence system that can’t deal with the data it already has. It would be one thing if this was an expansion of surveillance in existing markets. (After all, 9/11 was “predicted” by some questionable trends in the real stock market.) But setting up a new system in which people can bet on future terrorist activity is ludicrous.
Just like the undefinable “chatter” that prompts our semi-annual jump to orange alert, a terrorism futures market would reflect vague trends that could likely have little bearing on reality. Maybe this kind of ambiguity is acceptable when trying to track elections and the movie industry, but we should expect something a little more solid when we’re trying to decide whether or not we should be going to war.
For example, let’s say an intelligence analyst gets a “hot tip” that Iraq is trying to buy a bunch of Uranium in Niger and before sending this data into the intelligence ether (where it will soon be debunked), the analyst buys 1000 shares of “Iraq acquires a nuclear weapon”. With the analyst’s big buy, the price of I.a.n.w. starts to go up. Despite the fact that the IAEA, the UN, and the CIA express public doubts that Iraq has a nuclear program, the rising price of I.a.n.w. prompts others in the market to invest. Soon the rising price of I.a.n.w. is used to boost previously murky evidence such as aluminum tubes being used to enrich uranium. Before too long, I.a.n.w. is going through the roof and every piece of evidence is compared against the “conventional wisdom” (as determined by the market) that Iraq has clearly acquired a nuclear weapon. At this point, the president’s administration is stuck in a situation wherein they “know” that Iraq has a nuclear weapon but don’t have any specific undeniable evidence to support the claim.
Okay, maybe that example was a little over the top, but I think you get my point. Markets have a tendency to give too much credibility to whims and hunches. Sure, these hunches may often turn out to be legit, but you can say the same thing about your horoscope. If there’s anything to be learned from the last few years, it’s that rampant speculation can often obscure an economic (or in this case, terrorist) reality. Any number of factors could quickly lead to a terrorist threat being falsely exaggerated to the point of turning into the Enron of this pseudo-market. To paraphrase Billmon, this terrorist futures market idea is a bunch of pseudoscientific garbage that should have no role in a serious intelligence gathering operation.
4 comments
Copy link for RSS feed for comments on this post
Sorry, the comment form is closed at this time.
I view the market data as an efficient aggregation of honest expert opinion. While it would not be the be-all and end-all of intelligence (nor do I think it was ever intended to be) it seems like a handy way to guage what a given population (say, intelligence officials, scientists, foreign policy experts) really think is going to happen.
It is simply a way of assembling information, and solid research indicates it is more efficient and accurate than other traditional methods.
It is insufficient to point out flaws in markets and ipso facto conclude the DARPA plan was a “dumbass idea.” We would have to compare those weaknesses to the weaknesses existing in whatever we’re doing now.
Recent performance does not exactly commend our intelligence agencies’ methods. They should be allowed to think outside the box.
Comment by Steve — July 30, 2003 @ 7:37 am
Dumbass idea or not, the fact that this is shockingly immoral should deter anyone from suggesting it. Imagine if you offered a similar pool based on the likelihood that chioldren would be raped by catholic preists? Or one that tries to predict the next time a pregnant woman will be killed by her husband?
It’s one thing to need to honestly deal with the sad neccesity of military actions from time to time, it’s quite another to encourage people to gleefully profit from this kind of thing.
It’s sickening that anyone could consider predicting the future of war as a get rich quick opportunity, and furthermore it’s sickening that people would actually see this and think “good idea”. For a political party so obsessed with “decency” and values, the republicans sure tend to take the low road as often as possible. Then again, perhaps I’m being too optimistic: Perhaps American society really is on its last legs, and this is but yet another symptom of our sad decline.
Comment by Ross Angeles — July 30, 2003 @ 8:38 am
Of course the real fun would have been once the program took off it would soon turn from a terrorism predictor to terrorism influencer and terrorism financer. The various market indexes are a terrific mid to long term indicator of the overall market viability but they are terrible at short term and individual stock predictions. Much more than just the information about the company information influences the day to day valuation. And to really talk about the terrorist situation would be like telling wall street that the any time a company shot up in value the government would shut it down. How do you think that would effect the traders and the accuracy of predictions. The real stock market rewards companies that do well. The terrorist market would punish them. This changes it from a positive reinforcement feedback system to a negative reinforcement system. That makes a bit of difference in the modeling. Without drifting off into a bunch of statistical analysis jargon it is a fallacy to assume that the futures based system is appropriate for prediction of events that should be prevented.
Comment by Joshua — July 30, 2003 @ 10:36 am
Terror Markets
There’s been something of a debate among the blogosphere over the idea of a market to predict terror attacks. Some argue that it’s fundamentally sound, some argue that it’s possibly the stupidest thing, ever. Many fall in between. Count me…
Trackback by Apathy, Inc — July 30, 2003 @ 10:46 am