Crowdsourcing the unemployment rate

What's inflation going to be? Wanna bet?

"Wisdom of the crowds" is a pretty solid phenomenon. Ask a thousand people to guess the number of sweets in a jar, and the average (mean) of their guesses tends to be damn close to the actual number.

What's more interesting is whether the same idea works, not just to guesses, but to forecasts. Specifically, economic forecasts. If you ask a thousand people to guess what the unemployment rate will be in two years time, how will they do?

There are certainly reasons to be hopeful. Information is widely distributed, with little advantage accruing to experts; and in fact, unlike with simply counting sweets, there's likely to be a fair few people with "inside" information (hiring plans, perhaps, or a feel for how their sector is moving), which they may use to inform their guesses. Mix together enough guesses, and you could generate insight.

That's what the Adam Smith Institute and Paddy Power are hoping; the two have teamed up to offer markets in key UK economic statistics. You'll be able to bet on what the rate of inflation and unemployment will be in June 2015; the ASI's Sam Bowman writes that:

By combining the local knowledge of thousands of people, betting markets can outpredict any panel of experts. If these markets catch on, the government should consider outsourcing all of its forecasts to prediction markets instead of expert forecasters.

But there may still be some problems, both with the idea and its implementation.

Betting markets are indeed a theoretically great way of harnessing the wisdom of the crowds. As Bowman writes, the fact that people put money on their predictions means that more confident predictions are weighted higher, and vice versa. But the necessity of teaming up with a bookmaker to launch the idea means that there is a major distortion: the odds the bookie has set. Punters can get 7/2 that inflation will be greater than 5 per cent, and just 5/2 that it will be between 4.01 per cent and 5 per cent. That means that someone who thinks that inflation is most likely to be around 4.75 per cent may take advantage of the higher odds offered if they guess slightly higher. It also means that what Paddy Power think is most likely will skew the guesses.

A better version of the same idea would be to create a prediction market. The difference between the two is that in a market, the crowd takes the role of bookmaker as well as punter. The odds themselves get set procedurally, based purely on where people are betting, and so there's no chance of a bad guess on the bookies' part skewing the predictions.

But even if the market was designed to perfectly get the true thoughts of everyone in the crowd, there's still reasons to doubt that it can be that good at forecasting economic data.

There's quite a specific set of conditions which are required for crowdsourcing to work. James Surowiecki, who coined the phrase "wisdom of crowds", describes four: Diversity of opinion, independence of opinion, decentralisation of action, and aggregation of information. Of those, the one which is the most problematic in this case is independence. People's guesses aren't secret, and they affect others. That means you could end up seeing a circular mill, where everyone reinforces everyone else's beliefs to the extent that the crowdsourcing breaks down. Think: do you hold your beliefs about what might happen to the unemployment rate based on investigation of the primary data, or based on collation of expert analysis? If it's the latter, you'd be a net harm to the crowdsourcing, contributing largely to the flocking problem.

It would still be nice to get more financial bets. But that's mostly so that I could join in my sportier friends in having something where I feel like my expertise could win me a bit of cash; when it comes to actually trying to work out what will happen, we might have to stick with older methods.

Mark Carney. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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With the BBC Food’s collection under threat, here's how to make the most of online recipes

Do a bit of digging, trust your instincts – and always read the comments.

I don’t think John Humphrys is much of a chef. Recently, as his Today co-presenter Mishal Husain was discussing the implications of the BBC’s decision to axe its Food website (since commuted to transportation to the Good Food platform, run by its commercial arm), sharp-eared listeners heard the Humph claim that fewer recipes on the web could only be a good thing. “It would make it easier!” he bellowed in the background. “We wouldn’t have to choose between so many!”

Husain also seemed puzzled as to why anyone would need more than one recipe for spaghetti bolognese – but, as any keen cook knows, you can never have too many different takes on a dish. Just as you wouldn’t want to get all your news from a single source, it would be a sad thing to eat the same bolognese for the rest of your life. Sometimes only a molto autentico version, as laid down by a fierce Italian donna, rich with tradition and chopped liver, will do – and sometimes, though you would never admit it in a national magazine, you crave the comfort of your mum’s spag bol with grated cheddar.

The world wouldn’t starve without BBC Food’s collection but, given that an online search for “spaghetti bolognese recipe” turns up about a million results, it would have been sad to have lost one of the internet’s more trustworthy sources of information. As someone who spends a large part of each week researching and testing recipes, I can assure you that genuinely reliable ones are rarer than decent chips after closing time. But although it is certainly the only place you’ll find the Most Haunted host Yvette Fielding’s kedgeree alongside Heston Blumenthal’s snail porridge, the BBC website is not the only one that is worth your time.

The good thing about newspaper, magazine and other commercial platforms is that most still have just enough budget to ensure that their recipes will have been made at least twice – once by the writer and once for the accompanying photographs – though sadly the days when everyone employed an independent recipe tester are long gone. Such sites also often have sufficient traffic to generate a useful volume of comments. I never make a recipe without scrolling down to see what other people have said about it. Get past the “Can’t wait to make this!” brigade; ignore the annoying people who swap baked beans for lentils and then complain, “This is nothing like dhal”; and there’s usually some sensible advice in there, too.

But what about when you leave the safety of the big boys and venture into the no man’s land of the personal blog? How do you separate the wheat from the chaff and find a recipe that actually works? You can often tell how much work a writer has put in by the level of detail they go into: if they have indicated how many people it serves, or where to find unusual ingredients, suggested possible tweaks and credited their original sources, they have probably made the dish more than once. The photography is another handy clue. You don’t have to be Annie Leibovitz to provide a good idea of what the finished dish ought to look like.

Do a bit of digging as part of your prep. If you like the look of the rest of the site, the author’s tastes will probably chime with your own. And always, always, wherever the recipe is from, read it all the way through, even before you order the shopping. There is nothing more annoying than getting halfway through and then realising that you need a hand blender to finish the dish, just as the first guest arrives.

Above all, trust your instincts. If the cooking time seems far too short, or the salt content ridiculously high, it probably is, so keep an eye on that oven, check that casserole, keep tasting that sauce. As someone who once published a magic mince pie recipe without any sugar, I’m living proof that, occasionally, even the very best of us make mistakes. 

Felicity Cloake is the New Statesman’s food columnist. Her latest book is The A-Z of Eating: a Flavour Map for Adventurous Cooks.

This article first appeared in the 26 May 2016 issue of the New Statesman, The Brexit odd squad