A Market for 'Truth'

Using Bets to Find a Shared Truth

June 28, 2025

One of the most frustrating features of modern politics is that we can no longer seem to agree on basic facts. Before we can even begin to debate where we should go (the “What Should Be”), we get stuck in fruitless arguments about where we are right now (the “What Is?”). It’s like two people trying to navigate a city while arguing over which of their completely different maps is correct. No progress is possible.

This is where the concept of betting becomes a powerful tool for public discourse.

A bet works by forcing participants to move beyond cheap talk and confront the tangible risk of being wrong. It introduces a cost to misinformation. When you can say “I’ll bet you $20 on that,” a person must suddenly evaluate the real strength of their conviction. This simple mechanism does three powerful things:

  1. It Quantifies Belief: A bet transforms a vague feeling (“I think inflation is getting better”) into a precise probability. The price of a “YES” share in a market—say, 70 cents—becomes a real-time forecast of the collective belief, weighted by the money people are willing to risk.
  2. It Incentivizes Honesty: To win money, you have to be right. This creates a powerful incentive to seek out the best information, not just the information that confirms your biases. It rewards accuracy over rhetoric.
  3. It Demands Clarity: To create a fair bet, you must first agree on the terms. You must define a clear, yes/no question and name a trusted, neutral source (an “oracle”) that will decide the outcome. This process alone forces a level of clarity and intellectual honesty that is missing from most political debates.

By creating markets for key national questions, we can start to build that shared map of reality. We could create a public dashboard of our collective best guesses for “Where Are We Now?”; everything from housing prices to healthcare wait times.

Crafting Bets for “Where Are We Now?” in New Zealand

The key is to take a contentious statement and anchor it to a specific, verifiable number from a trusted, neutral source that all parties (in theory) should respect. The “oracle” is almost always a government department or official statistical body.

Here are some examples of bets you could create:

1. The Housing Debate

  • The Vague Disagreement: “The government’s housing policies are failing/succeeding.” vs. “The housing crisis is getting worse/better.”
  • The Bettable Question: “Will the Real Estate Institute of New Zealand (REINZ) report that the national median house price for the quarter ending September 2025 is higher than NZD $800,000?”
  • The Oracle: The official data release from REINZ.
  • Why it Works: It cuts through the rhetoric. Instead of arguing about vague success or failure, you are forced to make a concrete prediction. The market price for “YES” becomes the collective consensus on the direction of the housing market.

2. The Cost of Living / Inflation Debate

  • The Vague Disagreement: “This government has lost control of inflation.” vs. “Inflation is a global problem and it’s coming down.”
  • The Bettable Question: “Will the Consumers Price Index (CPI) reported by Stats NZ for the year ending June 2025 show an annual inflation rate above 3.0%?”
  • The Oracle: Stats NZ.
  • Why it Works: This is a direct test of economic reality. If a politician claims inflation is under control, but the market is pricing a 75% chance of it being over 3%, it provides an immediate, public reality check.

3. The Healthcare System Debate

  • The Vague Disagreement: “Our hospitals are falling apart.” vs. “We are investing more than ever in healthcare.”
  • The Bettable Question: “Will the Ministry of Health’s official data for Q4 2025 show the national average wait time for elective surgery has decreased compared to the official figure for Q4 2024?”
  • The Oracle: The Ministry of Health’s official data portal.
  • Why it Works: It moves the debate from anecdotes and headlines to a specific, measurable indicator of system performance. Both “investment” and “performance” are tested against a real-world outcome.

4. The Crime Debate

  • The Vague Disagreement: “Crime is out of control.” vs. “We are focused on the drivers of crime.”
  • The Bettable Question: “Will the NZ Police’s annual report for the fiscal year 2024-2025 show an increase in the number of reported retail crime incidents compared to the 2023-2024 report?”
  • The Oracle: The New Zealand Police’s official annual statistical report.
  • Why it Works: It forces a debate that is often driven by fear and emotion to be grounded in the official data. It separates the feeling of safety from the reported statistics.

How a Prediction Market Works: A Simple Example

Let’s take the inflation question: “Will the annual inflation rate for the year ending June 2025 be above 3.0%?”

In a prediction market, you can buy shares in either a “YES” or “NO” outcome. The prices of these shares reflect the market’s collective belief about the probability of the event. The key rule is that the price of a YES share and a NO share must always add up to $1.00.

  • YES Shares: Pay out $1.00 if the event happens (inflation is above 3.0%).
  • NO Shares: Pay out $1.00 if the event does not happen (inflation is 3.0% or lower).

Imagine the market price for a “YES” share is currently 75 cents. This means the corresponding “NO” share costs 25 cents (because $0.75 + $0.25 = $1.00). This price implies that the market, as a whole, believes there is a 75% chance that inflation will be above 3.0%.

  • If you agree with this and think the chance is even higher, you would buy YES shares at 75 cents. If you are right, your shares will be worth $1.00 each, earning you a 25-cent profit per share.
  • If you believe the market is too pessimistic and that inflation will come in lower, you would buy NO shares at 25 cents. If you are right, your shares will pay out $1.00 each, earning you a 75-cent profit per share.

This simple mechanism allows anyone to participate and back their belief with money, creating a powerful, real-time forecast.

How This Changes the Political Conversation

Imagine a televised political debate where the moderator could say:

“Mr. Luxon, you claim your policies are bringing down inflation. But the prediction market, with thousands of participants, is currently giving it an 80% chance that inflation will still be above the target range next year. Why is the market so convinced you’re wrong?”

This would fundamentally change the dynamic. It introduces a powerful, impartial “BS detector” into the public square. It would force politicians to argue against a quantified consensus, not just against their opponent.