Vote on values, but bet on policies?

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A while back, Giulio brought to our attention the radical but enticing idea of futarchy. The idea is the brainchild of Robin Hanson, a professor at George Mason who thinks outside the box. (Way outside the box—see, for example, a proposal to pay people who help "angels" who pretend to need help). Hanson proposes using prediction markets to estimate the likely impact of any policy a government might implement, be it social welfare programs or tariff reductions.

In brief, the citizens of a country would vote on the metric that is of greatest value to them (say, GDP, or GDP combined with a number of other metrics), but the policies to achieve that goal would be determined by a set of futures markets that would give an estimate of the likelihood of various policies maximizing the relevant metric. (See a concise summary of the mechanism or Hanson's original paper.)

One of the problems with this type of "way-out-of-the-box" idea is that it's almost impossible to know if it is at all feasible without trying it out first. A Catch-22 immediately arises—I can hardly imagine any existing government adopting such a completely unproven idea. Why, then, not start a new government? Perhaps there is reason to combine Hanson's far-out idea about futarchy with economist Paul Romer's not quite as far-out (but equally enticing) idea of charter cities? Instead of creating new cities that import good rules from a rich, democratic country, these cities could adopt rules based on this market mechanism. Check out more of these far-out (and always entertaining) ideas over at Hanson's blog Overcoming Bias.   


Ryan Hahn

Operations Officer

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