By Jeremy Deaton
In an appearance on Real Time with Bill Maher, astrophysicist Neil deGrasse Tyson challenged former GM executive — and ardent climate denier — Bill Lutz to make a bet. “You take all the scientists who author these papers, get them to pool their money and invest in companies that would benefit from global warming,” Tyson said. “And take all the people who are in denial of global warming, take all their money and invest in companies that would presume there is no global warming. And I would predict [the climate deniers] will all go broke in the next 50 years.”
As the country’s foremost science communicator knows, sometimes there is no point in waving around the same peer-reviewed studies. Sometimes you have to put your money where your mouth is. You have to turn empirical truths into cold, hard cash.
To that end, UK hedge fund Winton Capital is setting up the first market to make predictions about climate change. Climate scientists will bet on the future state of the climate, and the market will pay out yearly to those who make the most accurate predictions. The aim is to find a consensus among experts about the future of the climate.
The climate prediction market will rely on something known as the wisdom of the crowd. This phenomenon was discovered more than a century ago when English statistician Francis Galton studied a contest to guess the weight of 1,198-pound ox. Nearly 800 villagers entered the contest, and their estimations varied widely, but the average of their guesses was 1,197 pounds, almost the exact weight of the ox. The numbers showed that a large number of reasonably informed people with a diverse set of opinions can, in the aggregate, make accurate guesses.
To understand how it will work, look to Vegas odds makers. In last weekend’s match-up between the University of Washington Huskies and the Fresno State Bulldogs, Washington was the clear favorite. If every bettor put money on Washington and the Huskies won, the casino would lose money on the payouts. Casinos want an equal number of bettors on both sides to guard against losses. So, instead of allowing bettors to gamble which team will win or lose, casinos make the bet on whether a team will win by a lot or just a little.
This where the wisdom of the crowd comes into play. In the lead-up to the weekend’s game, Vegas had the Huskies as a 33-point favorite— bets were placed on whether Washington would win the game by more or less than 33 points. If the crowd got bullish on Washington, casinos might change their prediction to 34 or 35 points.
This is the crucial part. Because bettors tend to be sports aficionados steeped in the latest news and analysis, their predictions, on the whole, tend to be pretty accurate. Ultimately, Washington beat Fresno State by 32 points. That’s the wisdom of the crowd in action.
Back in the UK, Winton is trying to channel that wisdom to make predictions about climate change. The hedge fund will have experts make guesses about future temperatures and greenhouse gas concentrations. (Later, Winton may expand the project to accommodate more specific predictions about regional warming and sea-level rise.)
U.S. gambling laws are murky when it comes to prediction markets, so Winton is setting up its climate prediction market in the United Kingdom. But the climate prediction market isn’t intended as a money-making scheme. This is a philanthropic endeavor, the goal of which is to produce useful information. It’s likely that Winton will lose money on the project, as it pays dividends to scientists who correctly predict the future.
“With a prediction market, getting the information is the primary objective,” said Mark Roulston, the scientist overseeing the climate prediction market.“There’s not necessarily a consensus on all the implications of climate change. The idea is have a benchmark which could track any emerging consensus.”
Other methods exist for determining what scientists think about climate change. The United Nations Intergovernmental Panel on Climate Change (IPCC) aggregates the finding of researchers from around the world to estimate future temperatures under different emissions scenarios. But the IPCC doesn’t generate forecasts. Rather, it provides a road map of the future, showing how the choices we make today are likely to shape the climate in the decades to come.
Roulston certainly isn’t the first scientist to suggest people should bet on climate change. Last year, Bill Nye bet climate-denying meteorologist Joe Bastardi $20,000 that 2016 would be one the ten warmest years on record. Bastardi turned down the offer. Too bad for Nye — 2016 clocked in as the hottest year ever recorded.
University of New Mexico physicist Mark Boslough has repeatedly challenged climate deniers to bets on near-term warming of the climate, but no one has taken him up on the offer. Other scientists have had more success turning climate predictions into cold, hard cash, and they have encouraged others to do the same.
The Long Now Foundation has created a forum for anyone to make bets on the future, though there are no climate bets posted at the moment. Some wagers are rather interesting — like the bet that the population of Earth would decline over the next half-century. Others are more frivolous. One man wagered the Large Hadron Collider would destroy the Earth by 2018. If he wins the $1,000 bet, he will most assuredly be dead.
Money, however, is a measure of seriousness. It is hard to doubt the convictions of scientists willing to wager on the future of the planet. This fact may make Winton’s climate prediction market a useful tool for persuading business leaders who are on the fence about climate change. Scientists willing to bet on the climate are unlikely to misrepresent what they think.
Winton believes the climate prediction market could make meaningful forecasts that account for predicted policy shifts or technological breakthroughs. The market may predict the rise in temperature will continue unchecked, or it may predict that nations take the steps necessary to avert catastrophic climate change.
Someday, the climate prediction market may offer a way to evaluate the credibility of scientists. Scientists who take part in the prediction market may be more credible by being willing bettors. The market will also allow the public to determine how the views of a particular scientist compare to those of her peers.
Winton’s founder, David Harding, studied theoretical physics at Cambridge and firmly believes in using the scientific method to guide his business decisions. The climate prediction market is an extension of that philosophy. Winton plans to open the market to climate scientists at universities later this year. Next year, it will expand the project to allow anyone in the United Kingdom to participate.