I think that Renaissance humanist philosophy is often

misunderstood; and this mistake matters to me because I favor a revival

of the real methods of the humanists. The standard view is that Renaissance

humanists taught original doctrines, especially the "dignity

of man" that was the theme of Marsilio

Ficino‘s famous oration. They are thought to be "humanists"

because they believed in the centrality of human beings as opposed to

God.

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We’re just back from a family weekend in Lancaster, PA–Amish country. It’s dispiriting to watch real Amish people walk or trot in waggons past huge Amish-themed tourist attractions. (One store is actually called “Amish Stuff Inc.”) Extreme simplicity seems to attract the worst form of consumerism.

The Amish raise a philosophical dilemma that has often been written about. If you believe in freedom, this must include freedom of religion, which means the ability to raise your own children within your faith. Central to most religions are detailed rules or traditions concerning the rearing of children. However, if you believe in freedom, then you must believe in the right of individuals to choose their own values and commitments. Parents can interfere profoundly with such freedom. Indeed, all parents necessarily do. Anyone who grows up in a family is constrained by the legacy of family beliefs and values. (Even those who rebel have been influenced.) However, the tension between parental freedom and children’s liberty is especially sharp and clear in cases like the Amish, who prefer to be as isolated as possible from the rest of the world. In particular, they prefer their children to “drop out” of school in late childhood.

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I was just refreshing my memory about the “capabilities approach” pioneered by Amartya Sen, Martha Nussbaum, and others. (I have been asked to comment on a paper about “positive youth development,” and I thought that Sen’s ideas would be relevant and helpful.) The rough idea is that we ought to implement social policies that maximize people’s capabilities. The important human capabilities can be listed, although theorists differ somewhat about what belongs on the list. Enhancing capabilities is better than maximizing a set of behaviors or goods, because people should be able to choose what to own and how to behave, within broad limits; and different things are valued in different cultures. Thus trying to maximize goods or behaviors is too prescriptive. Enhancing capabilities is also better than simply giving people what they say they want or need. People can want completely bad things, e.g., crack cocaine. Or they can want too much, as in the case of Hollywood actors who want to have six Hummers. Or they can want too little, which is a common problem among the world’s very poor.

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A well-known experiment, run by Iowa

Electronic Markets, allows traders to place bets on the outcome

of political elections, including the current California governor’s

race. According to a paper

by Joyce Berg and others, the Iowa Political Market has

outperformed polls in predicting 9 out of 15 elections. Its

average error in predicting election results is about 1.5%, compared

to about 2% for an average poll. In some past elections, the Market

avoided major errors that marred all the major national surveys, whereas

it has never made a gross mistake itself. The apparently uncanny ability

of the Iowa Electronic Market to predict the future was one of the

reasons that the Defense Department recently floated the grisly idea

of a futures market in terrorism.

I’m struggling to understand the theoretical explanation for this

phenomenon. I realize that markets efficiently aggegrate the knowledge

of investors (who must try to make honest predictions, since their

money is on the line). But where do the investors in a political futures

market get their knowledge? They cannot simply ask themselves

how they intend to vote. As Berg et al. note, traders are "not

a representative sample of likely voters; they are overwhelmingly

male, well-educated, high income, and young" (p. 2). Some are

not even US residents. Thus their own choices in the real election,

assuming they vote at all, will be very different from those of the

American people. Yet they seem to be able to predict the actual result

more accurately than a random-digit telephone poll.

One clue is that a relatively small number of "marginal traders"

drive the market; they make many more trades than other people and

are less prone to sticking with an unlikely bet out of loyalty. I

would guess that these "marginal traders" are political

junkies: people who have no sentimental attachment to any of the candidates

but love to prognosticate about elections. We can assume that they

have seen all the polls—but that still doesn’t explain how they

outperform surveys on average. Could it be that they instinctively

recognize a consistent error in polling, and adjust accordingly? For

example, maybe polls tend to pick the real winner but predict a larger

margin of victory than actually occurs. (Races tend to "tighten"

right at the end.) Or maybe polls tend to make inflated predictions

for the Democrats’ share of the vote, because they count too many

low-income people as "likely voters." It’s also possible

that the marginal traders rely on one or two polls that are better

than the average. (Then we would find that the market outperformed

polls in general, but was no more accurate than the best of the polls.)

These are hypotheses backed with no evidence. But if one of them

turns out to be true, then we don’t need a market to improve on surveys.

We just need to make the same adjustment to poll results that the

marginal traders (a.k.a., the political junkies) are making. Likewise,

we would not benefit from a futures market in terrorism, but we should

strive to understand how the best informed and least sentimental observers

of terrorism make their predictions.