Daylight Network launches and tries its hand at futarchy

A new social network launched this week aiming to provide a platform “for America to once again become a nation ‘of the people and by the people’.” To facilitate this goal, the Daylight Network offers three features:

1. Tracking government spending
2. Participating in prediction markets on government decisions and policies (a service powered by Inkling Markets) with the end goal of influencing policymakers
3. Connecting with like-minded individuals to discuss government activities and propose alternatives

Features 1 and 3 are traditional government watchdog/social networking offerings, but let’s look at Feature 2. The Daylight Foundation incentivizing thoughtful participation in their prediction markets by providing (fake) trading currency to each trader, and paying out the winning traders with (real) cash prizes.

Many of the trades offered are similar to those found on sites like Hubdub and Intrade, such as estimating the final size of the stimulus package and predicting whether a given cabinet nominee will be confirmed. These prediction results are interesting, but are of limited value to the site’s mission as they have no influence on the actual events themselves.

One market within the site aims higher. Clearly drawing upon the futarchy theory of Robin Hanson (which receives no mention), this market breaks down the Senate stimulus package line-by-line and asks users to rate the provisions from 1 to 5 stars. As we’ve discussed before, in futarchy voters don’t vote on which policies they want (as in a referendum), but rather on which policies they believe are most likely to increase national welfare.

This is where the Senate stimulus package prediction market falls short. The crude formula identified by the Daylight Network is: “create jobs, minimize the impact on the federal debt, and promote fairness to all taxpayers.” Of these three variables, the first is clear and measurable, the second is measurable but less valuable (after all, this is a spending plan and a hit to the federal debt is a given, so the results should really be the focus), while the third is totally incomprehensible (how does one spend to promote fairness TO everyone?) Together, they become an impossible muddle of a standard to evaluate proposed policies against.

With enough users, the site hopes to gain enough momentum to influence the Senate’s deliberations. Unfortunately, by failing to clearly identify the future state that bettors should evaluate each line item against, the market is just collecting a list of voter favorites and least favorites rather than a collective impartial judgment of which items will most likely contribute towards reaching that future desired state. Still, the site is an effective forum to engage voters in talking about these issues and systematically capture their opinions.