Posted by Tim Harford

https://timharford.com/2026/05/betting-on-risk-changes-the-world/

https://timharford.com/?p=10177

It was one of the most astonishing displays of persuasion I have ever seen. In the audience, a group of Midwestern agribusiness types, who by profession should have been well attuned to climate change, but by culture were deeply sceptical. On the stage, a Germanic gentleman from one of the great Alpine reinsurance companies, presenting a meticulous analysis of how changes in rainfall and temperature were reshaping crop insurance premiums. The first, slightly awestruck question: “So . . . you think this climate change thing is real?”

It was a testament to the persuasive power of an apolitical nerd. The audience realised that this insurance analyst had no interest in the Woke Dems — he was just describing the world as he saw it. But it was also a window into the way that our views about the world shape financial markets for risk, and financial markets for risk shape our views about the world.

There are two venerable insurance industries, the French economist Michel Albert once explained. One has its roots in Alpine pastures, where Swiss villagers agreed to help each other out if one farmer’s cow died. The other was born in Edward Lloyd’s coffee house in 17th-century London, where sailors and shipowners would gather to gamble on which ships would sink and which would return safely to port.

Today we call both of these activities “insurance”, but they have very different souls. The Swiss version is all about mutual assistance, figuring out who is part of a community and who is not, and sharing burdens. The London version begins with the insight that some risks are fun, but also that people like to be smart about those risks.

Edward Lloyd himself created a network of well-informed correspondents across the ports of Europe and published a newsletter specialising in maritime cargo and foreign affairs. Cuthbert Heath, a Lloyd’s underwriter from the late 19th century onwards, went on to specialise in acquiring the data needed to sell insurance against losses from earthquakes and hurricanes. Selling well-priced insurance is a lucrative business, and the better the information and judgment about future risks, the better the business will be.

Financial risk contracts have long provided incentives to improve the state of our knowledge. In the 16th century the inveterate gambler Girolamo Cardano revolutionised our understanding of probability, while in the 17th the comet guy Edmond Halley used data on births and deaths gathered in Breslau to demonstrate that the government was selling life annuities too cheaply. A decade ago, I saw an agricultural insurance expert tell agribusiness traders something they didn’t know about climate change. It is all part of the same process.

With this noble tradition in mind, perhaps we should not be surprised that prediction markets are taking off. They are not new; in 2003 the Pentagon had been pondering a “Policy Analysis Market” in which people would trade on the risk of — say — a deadly terrorist strike, or, um, attacks on shipping in the Strait of Hormuz. The idea that the US intelligence community might host such a market was a political non-starter and the plan was dropped.

Yet the controversial idea made some sense. Prediction markets collect information by offering money for it. Markets may not be perfectly efficient but they are often informative: if you want to understand whether Arsenal’s lead in the Premier League table is commanding or precarious, the betting odds are a good place to start. Prediction markets, like any betting market, aggregate information.

The mood music, and the rules on gambling, have changed since 2003. Prediction markets such as Kalshi and Polymarket have become well known for offering contracts on all sorts of events, ranging from “Will Jerome Powell be arrested in 2025?” to degenerate nonsense such as “Will Jerome Powell say ‘Good afternoon’ during his December 2025 press conference?”

The libertarian in me says that people should be allowed to bet on pretty much anything, but the economist in me has some concerns. Of course, there is a worry — or there should be — that some people find gambling ruinously addictive, especially with smartphones putting a slot machine in every pocket.

But we should also be concerned that in trying to predict the future, we change it for the worse. It might indeed be useful to get a sense of whether Jerome Powell will be arrested, because it matters if he is. It does not matter whether he says “Good afternoon”, so there is little benefit in such a market existing. The market in “Good afternoon” does, however, create the clear risk that somebody tries to bribe or threaten Powell.

That is probably the least of his worries, but it is not hard to find examples of betting markets corrupting the real world. The most obvious cases are of crooked sports bets, where athletes rig games for their own benefit — or the benefit of people who are bribing or threatening them. It’s not even necessary to throw a match: it’s possible to bet on all sorts of trivia that are only peripherally related to the result.

Or consider Emanuel Fabian, The Times of Israel journalist who was offered bribes, then death threats, to change his report that an Iranian missile had struck near Jerusalem on March 30. A great deal of money was — courtesy of Polymarket — riding on the question of whether Iran had or had not succeeded in striking Israel. Without his consent, Fabian found himself forced into the perilous role of refereeing which side had won the bet.

Fabian’s plight is one of those things that, with hindsight, was obviously bound to happen. Whether prediction markets mean that athletes are being threatened if they don’t change a game, or journalists are being threatened if they don’t change a news report, this all seems like something that could be better thought through.

It would not be the first time that a new, disruptive industry smacked headlong into a problem that the stodgy old incumbents have understood for a very long time. In the early 1960s, life insurers were alarmed to discover that they were paying vast sums in compensation for “loss of limb” to policyholders in the Florida panhandle. One fellow lost a foot; fortunately he had a tourniquet with him . . . and insurance from several dozen different companies. Another chap bought insurance then shot off his own foot just 12 hours later “while aiming at a squirrel”.

There’s an old-fashioned phrase for this: moral hazard. And perhaps some old-fashioned caution is in order. Betting on the future can protect us from risk, and it can make us smarter about risk too. But it can also corrode and corrupt. Let’s be careful.

Written for and first published in the Financial Times on 15 April 2026.

https://timharford.com/2026/05/betting-on-risk-changes-the-world/

https://timharford.com/?p=10177

Posted by Tim Harford

https://timharford.com/2026/05/when-persistence-prevails/

https://timharford.com/?p=10140

Almost 51 years ago — when I was still a toddler — a gaming and science-fiction enthusiast named Lee Gold put together the first edition of an unusual collaborative role-playing-games magazine, Alarums and Excursions. This time last year, after 593 monthly editions, she abruptly stopped. Gold is in her mid-eighties, and her eyesight is no longer up to the task.

Alarums and Excursions, or A&E, was a quixotic project even by the standards of 1975. It was an Amateur Press Association, which meant that contributors would produce their own fanzines — a few pages of articles, ideas, fiction, art and comments on the zines of others — and then Gold would assemble them into a 100-page-plus compilation encompassing a vast variety of typefaces, layouts, writing styles and even paper colour. (Gold took on the project in part because the Los Angeles Science Fiction Society’s weekly zine was being overrun by articles about a brand new game, Dungeons & Dragons.) The maximum size of each issue was defined by the size of Gold’s stapler, and she mailed out the zine-of-zines compilation to all contributors and to anyone else willing to pay for a copy.

Back in 1975, that was a practical way to publish niche ideas, and the back-and-forth between different contributors made A&E a kind of proto social-media community, vastly slower and more thoughtful than the 21st-century version. Zines were technologically superseded by electronic bulletin boards, blogs, YouTube and social media (G+, Google’s shortlived answer to Facebook, was a huge source of game-design chat for a while). But Gold kept going anyway, and so did her contributors. A&E had some thin years, but in the issues before its demise it had been as voluminous as ever. We are all yearning for a bit more analogue in our lives, so zines are back.

Some of the hobby’s leading designers (Robin Laws, Mark Rein-Hagen, Jonathan Tweet) cut their teeth as readers of or fanzine writers for A&E. The leading professional role-playing magazines, Dragon and White Dwarf, were both outlived by A&E. Dragon stopped print in 2007 after 359 monthly issues; White Dwarf is at 522 and counting, but we role-playing purists would suggest that it stopped covering the hobby decades ago to focus on miniatures and war-games.

Gold’s achievement is all the more impressive given the boneheaded sexism she faced. In 1976, Gary Gygax — co-creator of Dungeons & Dragons, and the most powerful man in the hobby — phoned Gold under the misapprehension that she was male.

“You’re a woman!” Gygax said when Gold picked up the phone and identified herself.

“That’s right,” she replied, adding how grateful she was that Gygax had created D&D.

“You’re a woman,” he said again. “I wrote some bad things about women wargamers once.”

Gold recalls telling him, “You don’t need to feel embarrassed. I haven’t read them.”

“You’re a woman,” Gygax repeated. Gold said goodbye and hung up.

Despite being a role-playing game fan since issue 108 or so, I was never a subscriber to A&E. I was nevertheless brought up short when I heard that A&E was stopping. There is something truly remarkable about such epic persistence.

There are longer-running projects, of course. The Herald, The Times and The Observer all date back to the late 1700s. The White Horse of Uffington, a monument in the Oxfordshire countryside, is 3,000 years old. Like a newspaper, it needs to be endlessly renewed or it will disappear. Indeed, as with A&E, the community-building ritual required to scour the horse white may be more important than the physical product. In some cases, the process, rather than the result, is the purpose.

Not always, though. At Rothamsted in Hertfordshire, crop experiments have been running continuously from the mid-19th century to investigate the long-term sustainability of certain farming practices. The Framingham Heart Study in the US has been studying the effects of diet, exercise and medications on heart disease since 1948, and is now looking at the grandchildren of the original 5,209 participants. In such endeavours, the longevity of consistent data is valuable in part because it is so unusual.

But while scientific projects derive much of their value from sheer longevity, in the case of more human-scale creative projects there is something powerful about the fact that they simply cannot last for ever. The end of an endeavour such as A&E, like the death of a centenarian, only serves to underline the achievement.

A parallel that immediately sprang to mind was photographer Nicholas Nixon’s unforgettable series of portraits, The Brown Sisters. The first in the series was made at almost exactly the same moment as the first issue of A&E, in the summer of 1975. Nixon captured four young sisters — Mimi, 15; Laurie, 21; Heather, 23; and his wife Bebe, 25. Every year, he made another group portrait. Each photograph is well-executed, but you wouldn’t necessarily look twice at it in a gallery. What is remarkable is the relentless passage of time, unsparingly recorded as the sisters pass 40, 50, 60. It’s a memento mori to beat any of those Renaissance depictions of skulls: you can’t look at the series without conjuring in your mind the first heartbreaking portrait in which only three sisters remain.

“My intention would be that we go on for ever . . . just take three, and then two, and then one,” Nixon once said. But he stopped the project in 2022, with all four sisters still alive — if wrinkled and far closer into the lens. The project could have continued, I suppose. Nixon could have emulated the Framingham study and included children and grandchildren, recruiting his own replacement to make portraits until 2075 and beyond. But no: it is the contrast between the longevity of the work and the mortality of the subjects that gives the portraits so much power.

A&E, likewise, could have continued. It is after all a collective endeavour, the sum of all the fanzines within it. I asked Lisa Padol, a game designer and long-term A&E contributor who assembled a collection of tributes to Lee Gold, why A&E was stopping. She told me that Gold simply felt too much ownership to hand over the beloved name of Alarums and Excursions to someone else.

That is understandable, but the work will continue under a new name: E&A, or Ever and Anon. Perhaps it will become gaming’s Herald — or its Uffington White Horse?

Written for and first published in the Financial Times on 8 April 2026.

https://timharford.com/2026/05/when-persistence-prevails/

https://timharford.com/?p=10140