Prediction markets are a proven tool for estimating future outcomes. A recently published paper in Nature Climate Change suggests they can also shift beliefs about climate change.
The research by Sandra Matz, Columbia Business School's David W. Zalaznick Associate Professor of Business, Academic Director in Executive Education Moran Cerf, and Northwestern University Professor Malcolm A. MacIver, shows that when individuals place bets and face monetary costs for holding false beliefs about the future, their views on the climate gradually change.
Participants become more concerned about the risks, more supportive of remedial action, and more knowledgeable about the impact of climate change.
Watch the video above to learn about the new research, which was completed with the support of funding from the School’s Tamer Center for Social Enterprise, and read a transcript of the video below:
CBS: What sparked your research?
Sandra Matz: It's been really difficult to shift people's concerns about climate change or to get them to take action when it comes to changing their own behaviors or supporting policies that allow us to mitigate climate change. And the reason is that oftentimes we have to change something into here and now that's a hard decision for the brain to make because we have to give up something in return for something that might or might not happen in the future. And the other thing is that we also know that holding these false beliefs about climate change oftentimes don't necessarily come at a cost. You can imagine that if you live in a community where most people are skeptical about climate change, it is actually in your favor to also believe what your community believes. And so there's really no cost to holding these false beliefs. And one of the questions that we set out to answer is how do we change them? How do we actually make holding these false beliefs potentially costly and thereby change people's ideas and attitudes about climate change?
CBS: Tell us about the methodology you used
Matz: So the way that we set up the study was actually we got people to make bets about climate change. So we asked them, is this going to be the hottest July in the last 10 years? And we had them do this over the course of four weeks. And now what we were interested in is how did their concerns, their support for climate policies change before they participated in the market compared to after?
CBS: Why did you use a prediction market?
Matz: In prediction markets, there's an incentive for us to tell the truth because if we're not telling the truth and we're not betting our money in the things that we actually believe in, we might just lose that money. So it's like a way of kind of really accurately polling people's opinion. And the other reason for why I think prediction markets are so powerful is that they allow you to figure out things by yourself. So you essentially go in because you want to be right in your prediction. You have to learn something about climate science in this case. So you want to go in and learn as much as you can about the temperatures over the last 10 years, what the sea levels are doing, and so on and so forth. So it's like a really nice way of encouraging people to engage with climate science in a way that's like both a little bit playful and interesting to people.
CBS: What were the main findings?
Matz: We actually saw people's attitudes about climate change, their concerned about climate change, their support for climate policies change as a function of participating in the market. So if you compare the extent to which people were concerned before they participated in the market, you saw these levels go up. So people reported being more concerned, they reported higher support for climate policies, and they also just knew more about climate change.
CBS: How did neuroscience factor into your research?
Moran Cerf: I'm a neuroscientist and I never thought I'm going to end up studying climate change. But it happens to be the case that climate change is almost the ideal challenge for the brain. If you had to design a problem for the brain, climate change would be the perfect narrative for it. Using this tool, you can change people's minds without being too offensive. So if I try to change your mind, if I think he's a denier and I want to change his mind, I would usually use one of those tools like public service ads or information education, or I'll try to argue with you. And what we learn is that all of those things, they make you even more hostile, even less receptive, and less likely to change your mind. What's unique to this tool is that I'm not telling you anything. I'm just saying let's make a bet. You can choose whatever view you want, just put money on your view and you learn from reality.
CBS: What’s next for this research?
Cerf: The next big question would be to translate that to a global scale. So we did it with subjects in a smaller scale, but in the course of the study we spoke to the CFTC and to the government basically said: this should be not academic, it should be a real world market. So someone should take it and build a market around that where people can actually put their money in the millions, not in the thousands of dollars and play the real world. And we're now exploring exactly that. So we're trying to take it and make it something that is commercial and regulated that could allow people to really scale it up. And for me, as a scientist, I'm interested in the brain. So I want to know to what point is it that you're changing your mind? If I could take the people that we started and look at their brain, I want to know at what point does it actually shift your perspective and you start seeing things differently because in the end, what we want is to change the mind of people who are not on the same camp as ours and make them see the world the way we see it. And we are failing across the board in doing that. It's what kind of, all of the problem of the world right now, if you want, has to do with polarization, where people see the world in two different ways, and you can't really bridge that. If we can teach people how to see the world from other perspectives and how the world changes, we can actually solve a bigger problem, which is how to make the world more together.