Wednesday, February 3, 2016

Iowa -- land of red squares

I generally try to cut back on my political news consumption during and immediately after the Iowa caucuses. Though the event does bring some new information to the table, it also inevitably brings a great deal more noise. I did decide to bend my rules a bit for these two Krugman posts and was well rewarded for my time. In particular, I thought his discussion of Iowa as a Schelling focal point was as insightful as any piece of political analysis I've seen in 2016.

For those of us who were a bit vague on the term, he provided this helpful link:

Consider a simple example: two people unable to communicate with each other are each shown a panel of four squares and asked to select one; if and only if they both select the same one, they will each receive a prize. Three of the squares are blue and one is red. Assuming they each know nothing about the other player, but that they each do want to win the prize, then they will, reasonably, both choose the red square. Of course, the red square is not in a sense a better square; they could win by both choosing any square. And it is only the "right" square to select if a player can be sure that the other player has selected it; but by hypothesis neither can. However, it is the most salient and notable square, so—lacking any other one—most people will choose it, and this will in fact (often) work.
And here's how Krugman connects the concept to Iowa:

How does this apply to news coverage and punditry? Well, it’s obvious that the media have strong herding instincts; almost everyone wants to be somewhere close to the middle of the pack, telling the prevailing narrative. But there are many narratives that could, in fact, prevail. Partly that’s because such narratives can be self-fulfilling, and partly it’s because actually being, you know, right isn’t that important compared with being on top of the trend. So anything that gives special salience to a particular narrative can produce convergence on that narrative, even if everyone realizes that what’s going on is basically stupid.

Thus, should Rubio’s third-place finish in a small state really have caused him to shoot up so dramatically in market estimates of his probability of winning the GOP nomination? No, yet that’s what happened.

Meanwhile, on the Democratic side, the results were in all important respects a tie — but Clinton was a whisker ahead. Did that whisker matter? I’m pretty sure it did, a lot. If Sanders had come in even slightly ahead, the news would have been full of Clinton-is-doomed reports. Instead, the coverage has, as best I can tell, been rather subdued. Everyone knows that a fraction of a point in the vote makes no objective difference; but everyone also knows that “Iowa almost tied!” isn’t the same kind of focal point for Clinton doom stories as “Clinton defeated!” And so the coverage is radically different — and the betting markets have treated Iowa on the Democratic side as a non-event.

On a related note, there's an observation I've shared recently with friends and I've been meaning to work into a post. Back when Krugman first got serious about being a pundit, he was remarkably strong in two areas: economics (unsurprisingly) and press criticism ("Shape of Earth—Views Differ" alone would earn him the honor), but rather weak when it came to  politics. This was particularly notable around 2008 and 2009.

But Krugman did a couple of remarkable things (at least remarkable for an NYT columnist): he admitted his mistakes and he learned from them. His political analyses have improved steadily while the quality and credibility of most political commentators have fallen down a mine shaft.

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