John McGinnis, author of the forthcoming Accelerating Democracy: Matching Governance to Technological Change will be taking to Election 101 to blog each week about technology and the election. Anyone with a twitter account and an iPhone knows that technology has advanced at an explosive pace in recent years. We have, after all, elected the first ‘social media’ president, viral marketing has never been bigger, and prediction technology often seems instantaneous. Yet democratic governance has not yet caught up with all the advancements that have taken place. Technology can, of course, be a boon to democracy in many ways–while social planning was once a top-down enterprise, now we have a stream of information connecting us to the issues everywhere in record time. But technological advancement is not without dangers, and information often moves faster than it can be harnessed to impact public policy. John McGinnis will be dedicating his weekly posts to these issues, and the ways in which the government must keep pace with technological change. Read on for his introductory post:
Predicting the Effects of Policy at Election Time
In an election season, politicians promise that their policies will deliver wonderful results. But their proposed policies often conflict. Will more government spending or tax cuts generate economic growth? Will charter schools improve educational achievement or is it better to spend more on existing schools? To determine which policies to follow, democracy needs better information about their likely results.
My forthcoming book, Accelerating Democracy: Matching Governance to Technological Change, argues that we can make better policy by bringing democracy within the domain of our digital information revolution. We are all aware that our lives are being transformed as the devices created by exponential increases in computational power connect us to information and to one another faster than ever before. But we have not systematically considered how this technological revolution can improve democracy in our day, as the printing press did in its time.
New or improved information technologies, like empiricism, prediction markets, and dispersed media, can refine our evaluation of past policies and sharpen our predictions of future policy results. But they can do so only if we change laws and political structures to permit the information revolution to wash through our politics. In this post and those to come, I will use events in our current election to describe in more detail how we can improve democratic outcomes by embracing in contemporary politics our accelerating technological future.
I begin with the question of how we can better predict the consequences of an election. Experts predict these consequences all the time. For instance, the economist Joseph Stiglitz stated that Governor Romney’s election would “significantly” raise the risks of a recession. If this statement were true, it would be a reason to vote for the incumbent. But Professor Stiglitz is not only a Nobel winning economist, but also inhabits the left side of the political spectrum. It is not impossible that he is biased against the presumptive Republican standard bearer.
Predictions markets could help us test Professor Stiglitz’s claim. We could make markets in the likelihood of a recession conditional on victory by Governor Romney and conditional on victory by President Obama. One advantage of markets is that they offer powerful incentives against bias. Participants are rewarded for accurate assessments, not ideological frolics. They must put their money where their mouth is. And, not surprisingly, we have evidence that prediction markets are more accurate at evaluating the future than alternatives. They have proved better at predicting the winners of elections than polls.
Prediction markets help answer a fundamental question of democracy. How can America know what Americans know? Prediction markets help pool individual assessments for the collective good. Sadly, United States law greatly impedes the operation of prediction markets because they are seen as internet gambling. The most important such market, Intrade, is thus run out of Ireland. By relaxing our legal prohibitions, we could help generate more innovate prediction markets on a wider range of subjects. Indeed, so important is the information that they can provide, the government should consider subsidizing experiments with these markets rather than banning them. Information is a great public good and government restricts its effective provision at our peril.
John O. McGinnis is the George C. Dix Professor of Constitutional Law at Northwestern University.