Unemployment Betting

Yesterday, I wrote an oped in the AFR arguing that we should have prediction markets on unemployment.

This morning comes a press release from Centrebet:

Leading financial bookmaker Centrebet has today released the country’s first market on the next national unemployment figure, with a 5.6 to 5.7 per cent jobless rate as the opening $2.85 favourite

Their odds – and the implied probabilities – are below.

Below 5.0% $15.00 4%
5.0 – 5.1% $11.00 6%
5.2 – 5.3% $7.00 10%
5.4 – 5.5% $4.00 17%
5.6 – 5.7% $2.85 23%
5.8 – 5.9% $3.75 18%
6.0 – 6.1% $6.00 11%
6.2 – 6.3% $11.00 6%
6.4 – 6.5% $21.00 3%
Above 6.5% $34.00 2%

The profit margin implied by these odds is currently pretty high. Hopefully trading in this market will be sufficiently thick that it will come down.

I also hope that they’ll be able to open a market in the really policy-relevant number: unemployment in June 2010.

(xposted @ andrew leigh.com)

2 thoughts on “Unemployment Betting”

  1. I’d like to see betting markets for GDP growth. I’d bet sheepstations on the fact that the budget forecasts for 4.5% growth won’t be met!

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  2. Out of the theme here, but with unemployment on the rise suprisingly people bet more. Bets are smaller in size but a lot more people bet on sports. Desperate times push people to desperate measures.

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