Futarchy is a proposed government system in which decisions are made based on betting markets. It was originally proposed by Robin Hanson, who gave the motto "Vote on Values, But Bet on Beliefs".

A futarchic government holds an election to determine what metrics to optimize; for example, a ballot might allow citizens to vote on the following options:

Gross Domestic Product (GDP) over the next 4 years, as estimated by an impartial council of economists.
GDP over the next 8 years.
GDP over the next 30 years (etc).
Happiness, as measured by a large survey. (Over the next 4 years, 8 years, etc.)
Family values, as measured by (such-and-such procedure)

And so on.

A futarchy then sets up betting markets for the effectiveness of various policies. The policies with the best estimated effectiveness get implemented. The consequences are then observed, so bets about the implemented policies can pay out.

Related Pages: Prediction Markets, Government, Law and Legal systems, Voting Theory, Politics

Key cruxes

Pragmatic

Despite being around as an idea for 20 years, futarchy hasn't happened. Prediction markets aren't clearly more accurate than Metaculus and those markets that exist generally aren't useful for decision makers.
- Michael Story puts it well (emphasis his). It's easy to think that prediction markets tell us a lot about the world. But maybe instead they tell us who is a good bettor and who isn't. And perhaps we should hire those people to be grant funders or decision makers, but it's not clear we should use the process to make decisions.

"Most of the useful information you produce is about the people, not the world outside. Forecasting tournaments and markets are very good at telling you all kinds of things about your participants: are they well calibrated, do they understand the world, do they understand things better working alone or in a team, do they update their beliefs in a sensible measured way or swing about all over the place? If you want to get a rough epistemic ranking out of a group of people then a forecasting tournament or market is ideal. A project like GJP (which I am very proud of) was, contrary to what people often say, not an exercise primarily focused on producing data about the future. It was a study of people!

Often mechanistic ideas reduce friction and so allow things to happen at scale. It is unclear if grantmaking is at a scale that this is necessar

...