Hi! I wrote the original software for Long Bets some years ago. I can't speak officially about the project, as I was just a coder. But maybe my take here is useful.
I enjoyed the article, and think the analysis is correct as far as it goes. If your goal is to donate maximum dollars in the future, a Long Bet may not be your best choice. I just think that's rarely the goal.
The main issue here is that nobody does a Long Bet so that their charity gets more money eventually. The Long Now's mission is to promote long-term thinking. Long Bets in specific promotes clarity and accountability via carefully-stated long-term predictions and bets.[1] Take, for example, Bet id 362: http://longbets.org/362/
St. Warren of Omaha was not trying to maximize money to his charity. He has approximately infinite dollars; this was a rounding error. He was trying to make a point very publicly. He thought that hedge funds were generally horseshit, and that most investors would do far better making simple, straightforward choices rather than giving their money to people who promised to do wonders: https://money.cnn.com/2018/02/24/investing/warren-buffett-an...
What he was buying was not a specific dollar gain, but a clear, visible test of contrasting views. And it worked wonderfully; this bet was in the news off and on for more than 10 years.
I believe another goal of most people doing a Long Bet is to support the idea of long bets and long-term thinking, so I suspect that they look at the Long Now's rake as another donation to a charity they like. This analysis values that at zero.
I'd note also that for truly long-term bets, this analysis discounts the fact that the bettors will be dead. I think our current longest bet runs from 2002-2150. For a mere $1000, I doubt there's a donor-advised fund in the world that will agree to act as trustee for 150 years, selecting the most appropriate charity at the time of resolution. And of course no DAF will provide the clear record and eventual judging of a bet.
And really, if one's goal is giving money to charity, I suspect the best thing to do is give the money now. Whatever need they're addressing is presumably urgent enough that they'd rather spend the money today than put it in a long-term fund. And if it isn't (as is perhaps the case with the B-612 Foundation [2], which is saving up for a satellite), the charity in question is probably a better judge of exactly how to invest the money until they're ready for it. At the very worse, they money could be given with the restriction that it be used as an endowment.
So I look at this analysis as a good start, but definitely not complete given who actually uses the service.
> The Long Now's mission is to promote long-term thinking. Long Bets in specific promotes clarity and accountability via carefully-stated long-term predictions and bets.
Unfortunately, they completely undermine this when they allow bets/predictions to remain on the website even after a challenger has agreed to take the other side of the bet but the original poster declines to participate. Long Now does't even make a note of this online.
> Take, for example, Bet id 362:
Note for other: this is a highly unusual example, since it's the most high profile bet on the site.
I did something similar last year with https://www.gwern.net/Long-Bets . The even-odds restriction is a major one, and I think sabotages all of LB's goals. Why do prediction markets like PredictIt do more in a week or so than LB has done in almost two decades? It's hard to say that LB has been more of a success in getting people to put their money where their mouth is or bringing more rigor to public discourse (compare how often PredictIt or other betting markets are cited in political analysis to how often LB is cited... ever).
I agree with your complaints and indeed years ago I independently wrote an email to LB complaining about the fact that predictions could remain on the site even after challenges had been rejected. However, directly comparing LB to PredictIt seems unfair. LB is just not a big priority for the Long Now Foundation, and I expect it took vastly less investment to launch or for continued operating expenses. It's not surprising it accomplished less.
Edit (in response to your edit, I think): Sure, public exposure has not been commensurate with contribution. Not shocking, but frustrating.
> LB is just not a big priority for the Long Now Foundation, and I expect it took vastly less investment to launch or for continued operating expenses. It's not surprising it accomplished less.
Sure, it's not a priority - now. Because it failed. But it had quite a splashy launch and they had high hopes and really pulled in their board of luminaries for the initial batch of predictions. It launched so long ago it could have dominated any emerging online prediction markets. It had the opportunity, a useful goal, a nonprofit backing, tremendous goodwill, and celebrity. But instead, even something like Augur, a weirdo cryptocurrency project which formally launched hardly a year ago, will turn over more in a month or two than LB over 2 decades.
> But instead, even something like Augur, a weirdo cryptocurrency project which formally launched hardly a year ago, will turn over more in a month or two than LB over 2 decades.
Maybe I'm just missing something, but Augur seems pretty dead to me? I only see three bets currently open (one about the UK general election, two about NFL games).
That being said, the Long Bets project was always about high-profile individual bets, not the larger markets that Augur seemed to be trying for.
What are you looking at, https://predictions.global/ ? An estimate of $2.6m at stake sounds pretty good to me, compared to LB which has like $40k at stake right now.
I don't know enough about Augur to understand what the difference between the two sites is. What does seem strange to me, though, is that predictions.global claims that $2.6M is at stake, but the top 10 markets sorted by "money at stake" only sum up to roughly $288k at stake. (The last one in the list is under $1k, too, so I have a hard time believing that the remaining $2.3M is all in the long tail.)
It should be possible to turn an odds bet into an even-money bet with some financial engineering. Like "I predict that either we will have talking horses, or the last two digits in the Dow will be between 0 and 45." Probably there's a way to do it with cryptography too.
This only solves one of the issues you identify. But I've always seen LB as a publicity gimmick rather than a serious marketplace.
I'm not quite following what you mean. Sure, you can change the probability and make one side arbitrarily likely to win by appropriate wording. (Heck, just take one of the existing predictions which has ~0% probability - there's plenty of them.) That doesn't change the problem that you can only win at most twice the money you put up despite locking it up arbitrarily long.
The humany truth is that public bets, particularly long bets, are less about making profit and more about stating your view boldly and publicly. Within this context opportunity costs barely matter.
It seems a bit limiting that they only deal with equal stakes/odds, i.e. we both bet $1000 for/against an event. Allowing for variable odds would make the deal better for events which you had less confidence in, solving the problem highlighted.
Variable odds don't solve the core problem which is that "half the investment income" is a high enough fee that you need a very large edge before you do better than just putting the money in a donor-advised fund.
Changing the odds is the only way to increase your edge... but admittedly, that 'half the income' will become a very large fee, such that the odds you need to offset this would make it unlikely that someone would take the other side of your bet.
Without variable odds, there is no information here to be discovered, since there will always be as much money for & against the bets. The liquidity doesn't come into it.
is 7% a reasonable 90 year return? I would guess closer to 1-2% would be reasonable over that time frame, which puts you in the black at year 90 even at 90% confidence.
I enjoyed the article, and think the analysis is correct as far as it goes. If your goal is to donate maximum dollars in the future, a Long Bet may not be your best choice. I just think that's rarely the goal.
The main issue here is that nobody does a Long Bet so that their charity gets more money eventually. The Long Now's mission is to promote long-term thinking. Long Bets in specific promotes clarity and accountability via carefully-stated long-term predictions and bets.[1] Take, for example, Bet id 362: http://longbets.org/362/
St. Warren of Omaha was not trying to maximize money to his charity. He has approximately infinite dollars; this was a rounding error. He was trying to make a point very publicly. He thought that hedge funds were generally horseshit, and that most investors would do far better making simple, straightforward choices rather than giving their money to people who promised to do wonders: https://money.cnn.com/2018/02/24/investing/warren-buffett-an...
What he was buying was not a specific dollar gain, but a clear, visible test of contrasting views. And it worked wonderfully; this bet was in the news off and on for more than 10 years.
I believe another goal of most people doing a Long Bet is to support the idea of long bets and long-term thinking, so I suspect that they look at the Long Now's rake as another donation to a charity they like. This analysis values that at zero.
I'd note also that for truly long-term bets, this analysis discounts the fact that the bettors will be dead. I think our current longest bet runs from 2002-2150. For a mere $1000, I doubt there's a donor-advised fund in the world that will agree to act as trustee for 150 years, selecting the most appropriate charity at the time of resolution. And of course no DAF will provide the clear record and eventual judging of a bet.
And really, if one's goal is giving money to charity, I suspect the best thing to do is give the money now. Whatever need they're addressing is presumably urgent enough that they'd rather spend the money today than put it in a long-term fund. And if it isn't (as is perhaps the case with the B-612 Foundation [2], which is saving up for a satellite), the charity in question is probably a better judge of exactly how to invest the money until they're ready for it. At the very worse, they money could be given with the restriction that it be used as an endowment.
So I look at this analysis as a good start, but definitely not complete given who actually uses the service.
[1] It's very much in the spirit of the Erlich wager: https://en.wikipedia.org/wiki/Simon%E2%80%93Ehrlich_wager
[2] https://b612foundation.org/