Monday, February 08, 2010

More on betting

I see that through the Climate Onion (did they really aim to be a parody of climate science blogs, and in that case which ones are they parodying, I wonder rhetorically), Gabi Hegerl has offered a bet on future warming.

The terms are simple: she is prepared to wager that at least one of the next 8 years 2010-2017 inclusive will be hotter than 1998 according to HadCRUTv. The stakes are a $10 bottle of wine, and she'll take on up to 10 opponents, for a whopping $100 max stake.

Hans von Storch regards this as a "highlight" of his blog. It seems small beer to me, the stakes are smaller than the similar £100 bet I have with David Whitehouse (though I only win if one of 2010 or 2011 is hotter than 1998). Of course the $10,000 bet with Bashkirtsev and Mashnich is more interesting by a couple of orders of magnitude :-) Of course Hegerl is virtually certain to win, but the stakes are small enough that a couple of people so far have offered to take her up.

I see that Brian Schmidt has posted recently on the climate bets (thanks Hank for the comment). As he observes, I'm already well on the way to winning the big-money version with the recent 6-y rolling average comfortably above the 1998-2003 baseline (though we are not yet into the period that actually counts). Actually according to the NCDC data that we agreed to use, it's not quite as solid a warming as the figures he states, but never mind. According to January satellite data, things are looking promising for 2010 too, but it's early days yet, and El Nino seems to be about at its peak, so its contribution to global temperature may not last much past the summer (even accounting for a few months of lag). The surface obs generally lag behind the satellite analyses, HadCru still hasn't done last October's figures, but GISS and NCDC are up to date to the end of last year, and according to them it's about as hot as the end of 1997 was, without such a large El-Nino-attributable contribution.

31 comments:

EliRabett said...

AND the sun is warming up

crandles said...

Am I allowed to ask where everyone stands in climate bet winnings collected now that I have collected my $1330 profit on intrade's 2009.GlobalTemp.Top5 contract?

(I also won a couple of hundred dollars on the previous year.)

James Annan said...

I think the leader board is:

1) Chris Randles ~$1500
2) Connolley ~$20 or thereabouts
3) the rest of us ~$0

:-)

Enjoy your lofty position while it lasts...for the best part of another decade! Well done anyway. I guess you owe me a beer for the fat lot of help I've been :-)

Eli,

But but but but...we all know that the sun can't have any effect, the IPCC told us so :-) I read it on the internuts, it must be true. Oh, and Piers Corbyn too. (Seriously, I shouldn't think it will be much help for my short-term bet, but it should probably add a little boost to the big one.)

georgesdelatour said...

I take it you don't agree with Mojib Latif.

Marco said...

@georgesdelatour
Although probably a "hit-and-run" comment from you, I'd say James wouldn't mind if Latif was right:
http://newsimg.bbc.co.uk/media/images/44617000/gif/_44617158_global_mean_temps466.gif
Note the upward curve after 2010?

Carl C said...

congrats Chris, well that will help pay your electric bill for running all those CPDN models! ;-)

James Annan said...

Georges,

No, I agree with the Hadley Centre, RealClimate and just about everyone else on this one :-)

The flaws in the Latif work seem obvious to me, I'm surprised they are still pushing it so enthusiastically.

B said...

A: you said in 2005 "I suppose it would make sense to actually exchanged signed bits of paper about it". Are you still happy to sign it?

James Annan said...

Certainly. After all, in the unlikely event of my losing, I could hardly run away from paying up without destroying my credibility.

B said...

A: I would expect nothing less. I am happy to sign it off. However it appears you have lost some bearings: in original "contract" we have agreed to use globally averaged land surface temperature but now you refer to globally averaged land AND OCEAN temperature. You should be a bit more consistent.

Obviously your version of the "contract" is clearly unenforceable and I will get it properly drafted so we would not rely on your credibility but rather on your assets. In my experience you cannot bank someone's credibility.

As you believe that it is unlikely for you to lose I offer you to bump up our stakes from thrupence to something slightly substantial. Do you mind to increase our bids to $100K? In the end if you not going to lose it would be better for you. I hardly see you buying that watch you wanted for $10K in 2018.

James Annan said...

Sorry for confusing the land and global data sets, there have been a number of bets under discussion and most depend on the latter.

I don't think it is a good idea to increase the stakes. My taste in watches is likely to be satisfied with $10,000, unless something goes very seriously wrong with the US economy!

However, I am working right now on something that could give you the chance to bet with substantially more favourable odds.

B said...

A: so I take it as you are happy to have the contract drafted up properly and delivered to you for execution? In order to make this contract easily enforceable I would like to have registered charge on your property to be discharged on agreed date if we lose. If you would lose the charge will remain in place unless the debt is repaid. Obviously I would provide the same in opposite direction on the same conditions. Are you OK with such conditions?

What do you have to lose by increasing the stakes?! You're so confident in getting it right! Or may be it is not the case now?

... and US economy... Who could foresee events of 2007-08 in 2005? So we cannot discount it. I am definitely not going to bet on it.

As long as this "something" would appear to be feasible we would consider it.

B said...

A: Shall I know your answer? Absence of prompt response appears like you got cold feet. It is easy to brag about our bet but when we decided to get serious we do not have much action on your behalf. Less talk - more action please.

James Annan said...

I was away on a business trip.

I do recall sending you or your colleague something several years ago and you not getting back to me on it. Regardless, I am Scottish and although I am not a lawyer, it seems clear that our existing agreement, which was IIRC verified by independent journalist(s), is enforceable against me under this law.

http://en.wikipedia.org/wiki/Scots_contract_law

"a promise need only be evidenced in writing for [irrelevant categories]".

But as I said several years ago, I would be more than happy to sign up to some clearly written agreement.

B said...

I am currently in Australia and I have discussed our bet with my son who is practicing law. He had a quick look over the "contract" you have sent to us years ago and concluded that it would be extremely hard to enforce if need comes to be. However it is still better than nothing.

Enforcement would be hindered by practical issues: you're residing in Japan and therefore any claim if needed should be constituted in Japan. On other hand you would have problems enforcing such contract in Russia. In effect it would be quite hard to enforce making it economically not feasible.

The Act you referring to relates to writing requirements of certain contracts which otherwise would be invalid. It does not imply that other contracts may not be in writing.

Not having a contract in writing makes it harder to establish the fact of its existence. Even if a contract is set out in writing it still may be contested. Advice which I have received from my son is to get a security over your property so enforcement if needed would be much easier. Best option is to have registered charge over your property. This will require application to the court for charging order setting out basis for charging order and discharge. If we would ever need to have our bet to be judged by third party then relevant court will be a proper forum. Second option is to put up a caveat against your property. It would not involve the court and still reasonably good security and court may consider it if necessary.

My son agreed to put up his estate in Australia as security in opposite direction (especially after you wanted to make it binding on him). I would assume that you would not be interested in a security located in Russia which would be hard to enforce.

Legal expenses will be in order of few thousand dollars so increasing our bet to $100K makes it reasonable. As you are so confident that you going to win you would get $90K on top for nothing (just imagine: you would get yourself Toyota Prius to reduce your CO2 foot print - isn't that great for a climate?!). The only reason why you would not take the bet increase is that you are not so confident that you will win and you have second thoughts. If it is the case then it is good time and place to say so. Otherwise you should accept the bet increase.

James Annan said...

The facts of our agreement have been widely documented by independent journalists, some of whom I have communicated with directly (I assume you have too) and also the emails we have exchanged. I suspect that increasing the stake from the current significant but not excessive level would make the loser much more tempted to try to renege on the agreement. I also have no interest in incurring significant legal fees unnecessarily.

B said...

A: Problem is that in case of loser trying to avoid payment it would be hard to enforce. Members of the press and their articles may be used as indirect evidence but may be disregarded by the court. Proper paperwork is required.

So in order to make our agreement more robust and certain we need to have security in place so it would be close to impossible to avoid payment. That's why we ask for and happy to provide security by a property.

We not asking you to pay any legal costs. As we are confident that we will win we are happy to cover legal expenses for both sides to make our agreement secure.

Obviously we need to have higher stakes so we would cover all legal expenses and have some dough for bread and butter. As you are so confident that you going to win it would be just upside for you. It boils down to:
1. We do all legal stuff and indemnify you against all costs regardless of the outcome of the bet
2. Security for the agreement is required so no one would skip payment in the event of loss.
3. We offer to increase the stakes to $100K only to test your confidence. No strings attached. Your refusal to accept higher stakes will be considered as indication that you are not as confident as you claim to be.

James Annan said...

I have no wish to change the agreement that we reached several years ago.

B said...

Nothing further.

crandles said...

Interesting stuff.

On a much lesser scale of bet, I see

"El NiƱo is expected to continue at least through the Northern Hemisphere spring 2010"

as opposed to 'at least into the Northern Hemisphere spring 2010'

James Annan said...

I agree it seems to be on its way down, though it might still hang around long enough to add a bit to the temps through most of the year.

GISS and NCDC both show a hot Jan, ahead of 1998's equivalent value (v narrowly in the latter case)...

What are you betting for this year?

crandles said...

This will probably be unreadable:

Contract Posn Avg Last TrdPL $ Bid Ask

Climate Change Prediction: Al Gore versus Prof. Scott Armstrong
GOREvARMSTRONG.ARMSTRONG -53 53.8 45.0 47.76 53 -10
Will 2010 be a warmer year than 2009?
GLOBALTEMP.2010>2009 +1 55.5 55.0 12.50 2 -6
Will 2019 be 0.2 degrees celsius warmer than 2009?
GLOBALTEMP.2019.0.2C>2009 -1 98.0 98.0 0.00 2 -1
Will 2019 be a warmer year than 2009?
GLOBALTEMP.2019>2009 0 0.0 95.0 0.00 2
Will Global Average Temperatures for 2010-2011 be THE warmest on record?
2010.GLOBALTEMP.WARMEST 0 0.0 36.0 4.96 -1
2011.GLOBALTEMP.WARMEST 0 0.0 30.0 0.00 5 -2
Will Global Average Temperatures for 2010-2014 be AMONG FIVE warmest on record?
2010.GLOBALTEMP.TOP5 +11 72.2 75.0 6.70 -11
2011.GLOBALTEMP.TOP5 0 0.0 55.0 0.00 1
2012.GLOBALTEMP.TOP5 0 0.0 65.0 0.00 1
2013.GLOBALTEMP.TOP5 0 0.0 - - 1
2014.GLOBALTEMP.TOP5 0 0.0 - - 1

crandles said...

If you can follow that, you will see my biggest holdings are:

-53 off $10 bets for(but the -holding means against) UAH lower trop temp being less than 0.329. Average price 53.8 so the odds are marginally in my favour. Latest price 45 so I have a book profit so far of $47.76. I have book orders to liquidate my 53 bets at suitably large profits and am willing to increase my holding by a further 10 $10 bets.

January came in at .72 and Feb also looks hot.

My other holding is +11 $10 bets on 2010 being in the top5 years per GISS. Average price 72.2 last price 75. Book profit of 6.70 is mainly on settled holding rather than current holding.

So not much in the way of holdings at present. The 50:1 odds in my favour betting against GLOBALTEMP.2019.0.2C>2009 is nice but it is only 20c at risk for a possible gain of $9.80 and waiting 10 years for it is a little silly. I only put it there as encouragement towards market development for which I am quite happy to pay 20c.

crandles said...

And as soon as I say +.72 for UAH Jan there is a new version giving 'only' .63 for Jan and .613 for Feb.

No change in trend though.

crandles said...

Any reaction to my positions?

I forget now but it is at least 6 out of 6 made or showing profits is this getting unlikely to be luck?

James Annan said...

Um...yes, looks pretty good to me.

The 2019 bet is interesting - since the IPCC claim a trend of 0.2/decade the odds seem good, personally I suspect reality will be a bit lower but I'd bet either way with odds of 50:1!

I really must find my round tuit and see if I can register again...

crandles said...

I thought that if you had a round one, you shouldn't need to find it. Maybe it has gone a bit square?

2010.GLOBALTEMP.WARMEST has moved from a last trade price of 36 on 6 March to 60 with a range of 61-67. Seems quite a move. Maybe consistent with El Nino more likely to last longer, but it still seems rather extreme a change over 10 days.

Have I missed some important news? Could things really become that much clearer before May ENSO prediction barrier?

James Annan said...

Well I was trying to keep it in a square hole, maybe the round tuit didn't fit...

I don't think there is any big news on ENSO or temperatures, though the latest weekly info says it should last "through" spring rather than "into", but this does not seem to be backed up by any forecasts.

However, there may have been some news about observed temps, eg this blogger has picked up something. I would guess that most of the players are less well informed than you and are likely to be influenced by such fluff, but maybe there is some insider trading from the modellers themselves!

As we know from FX, the discrete winner-takes-all bets are liable to be volatile. A scaled bet would probably be sitting close to 0.6C.

crandles said...

>"though the latest weekly info says it should last "through" spring rather than "into", but this does not seem to be backed up by any forecasts."

Now IRI have published the forecasts, yes there does indeed seem a lack of much that supports that.

17/02/2010 Average, dynamical models 1.1 0.8 0.6 0.4 0.2 0.1 -0.1 -0.2
17/03/2010 Average, dynamical models - 0.7 0.5 0.2 0 -0.1 -0.2 -0.2

MAM has gone from 82% El Nino probability to 85% but AMJ has gone from 56% to 50% and MJJ from 38% to 32%.

The best support I see is probably that the number of models predicting an anomaly of less than .4C for MAM has gone from about 3 to 5 models down to just 2 statistical models. However it seems pretty marginal with 6 models at .5C or under declining to 5 models.

For your £100 bet, this might easily be more than compensated by the deteriorating outlook for AMJ and JJA.

>"A scaled bet would probably be sitting close to 0.6C."
Well that would, I think, depend on the scale. ;o)

crandles said...

According to my analog years for MEI level and trend:

http://www.flickr.com/photos/37346653@N05/4484214228/

the risk of La Nina this year seems fairly small. At least the outcomes seem biased high compared with
http://www.esrl.noaa.gov/psd/people/klaus.wolter/MEI/comp.png
at
http://www.esrl.noaa.gov/psd/people/klaus.wolter/MEI/mei.html

However I am not sure I should trust my analog selections. Especially as Nino 3.4 anomaly seems it may have resumed downward trend after a Kelvin wave induced plateau.

Dallas said...

There is a new climate wager being offered, so I thought you might get a chuckle out of layman's perspective on climate wagering.

What I like about the wagering aspect is one can cherry pick his butt off in pursuit of a few bucks, without being accused of cherry picking.

http://ourhydrogeneconomy.blogspot.com/2011/05/more-analyzing-wager-to-death.html