The Madness of Sports Betting: Economics Edition
Editor’s Note | If you’re one of the millions of Americans who filled out a college basketball national championship bracket this year, odds are you’re out of luck. ESPN reports that only two brackets out of over 5.9 million submissions to ESPN.com correctly predicted that the University of Kentucky, the University of Connecticut, Butler University in Indianapolis, and the longest of long-shots, Virginia Commonwealth University, would make it to the semifinals.
Given that none of these teams are top seeds and two aren’t even in the top 30, Luke Winn of Sports Illustrated has dubbed this “the most surprising Final Four of all time.”
Justin Wolfers, a professor at the Wharton School at the University of Pennsylvania and visiting fellow at the Brookings Institution, has long researched the behavioral economics of sports betting. (He even teaches a graduate-level class called ‘Behavioral Economics and Prediction and Sports Betting Markets.’
In this Making Sen$e web exclusive, Wolfers and Paul Solman chat about how we can make the best decisions when it comes to filling out March Madness brackets, why economists are interested in sports betting and the fact that even a 100-1 shot can be expected to win — once every hundred times. Perhaps you’ll even take away some tips for picking next year’s bracket.
Since we’re sure you’re burning with curiosity, let us fully disclose that not a single person in the NewsHour office pool picked any of the Final Four teams, and only 15 percent of us had a team make it to the Elite Eight. President Obama’s picks are all out as well. Paul, sufficiently humiliated in the annual NFL playoff pool in Norwalk, Ohio, decided to sit this one out.
Don’t miss Hari Sreenivasan’s interview with Frontline’s Lowell Bergman on the big business of NCAA basketball and March Madness.
Did you do any better than the rest of us? Feel free to let us know.
Video produced by Elizabeth Shell.