Saturday, September 1, 2007

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Why isn't there a scandal market?

In thinking about the fall of Larry Craig, I went back and re-read Dan Popkey's Idaho Statesman story from last week. Popkey's story makes it clear that rumors had been dogging Craig on this question for years, of not decades.

Craig is clearly not the only politico that carried around the whiff of scandal before it actually hit. My Louisiana contacts tell me the same thing was true of David Vitters. And, Lord knows, everyone knew Bill Clinton had a problem before a story broke.

So here's my question to economists and political scientists. If there are prediction markets for elections, why isn't their a prediction market for politicians and scandals? Admittedly, elections have a clear end date and (hopefully) a clear winner. Still, one could devise several market outcomes on which to bet: a Washington Post story about a scandal, a Nexis count of news stories about a scandal, or even an actual resignation. Contracts could be limited to, say, 3-month or 6-month time windows.

This sort of thing could have the potential to be a useful indicator (admittedly, it would also be ripe for manipulation by mischief-makers; but so are election markets) for media and politicos -- it could create a metric for off-the-record, on-the-qt-and-very-hush-hush kind of information.

My question to Tyler Cowen: is there are markets in everything, why isn't their a Scandal Pool?

posted by Dan on 09.01.07 at 02:48 PM


I agree; in particular, I heard rumors about Mark Foley a couple of years ago, and about George Roche (of Hillsdale College) a decade ago. I didn't care about Foley's sex life because I'm a libertarian so it's none of my business, although I would have tried to contact him and warn him that he needed to control himself...but I assumed he was smart enough to figure that out on his own. Nebbish!

posted by: John Fast on 09.01.07 at 02:48 PM [permalink]

I think a fair amount of the reason is that it's hard to say which scandals capture the public imagination and which don't. There seems to have been more time spent on Craig's questionable sex excapades than on Vitters', even though it appears Craig's didn't even involve having sex.

posted by: Mike on 09.01.07 at 02:48 PM [permalink]

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