Inevitable bets versus useful bets

Many people in the rationalist community advocate betting — either because of how socially useful prediction markets can be, because it helps you adjust your expectations, because you need to calibrate your beliefs, or because it helps you make your beliefs pay rent. These all miss the prerequisite point — you’re betting whether you want to or not.

Every decision you make is a bet with the universe — you’re trying to maximize the probability that the outcome you prefer will happen. Most of these bets are ill-defined and hard to evaluate. This means the feedback you get sucks — it’s too hard to figure out what it means. And when you don’t operate in a predictable rapid-feedback environment, you can’t develop expertise — so you’re going to be very susceptible to biases, as Kahneman explains.

So we want to develop our intuitions and improve out ability to predict and understand the world — why not just make predictions and see if they pan out? That wouldn’t be a bad idea, if people weren’t so bad at honestly remembering what they thought. But they are. So you should write them down. But that doesn’t tell you much about whether you’re improving, and at the very least it would be nice to have a place to make and track your predictions.

This helps, but doesn’t really make sure you commit to the guess — and unlike your decisions, free guesses have no consequences — like practice, where your mistakes don’t matter. It’s actually more helpful for you to have consequences riding on your guesses. Just like reality, bets make sure that your map doesn’t stray too far from the territory, and your beliefs generally match the real world. Bets you choose can be useful in assisting this correspondence, whereas decisions you make are inevitable, and less helpful. That means that betting is in some sense, not just practicing, but parallel to deciding — it’s just extending the types of things you decide on in a useful way.

But as I alluded to in the beginning, it goes much further. It’s also about signalling and the public discourse — and there, I think Alex Tabbarok has it right.

Overall, I am for betting because I am against bullshit. Bullshit is polluting our discourse and drowning the facts. A bet costs the bullshitter more than the non-bullshitter so the willingness to bet signals honest belief. A bet is a tax on bullshit; and it is a just tax, tribute paid by the bullshitters to those with genuine knowledge.