Tuesday, January 16, 2007

Thinking about betting again...

...not to mention Christianity and econometrics, I'm not convinced any more by my arguments of earlier about betting, and whether it's right as a Christian.

My point earlier was that if I could identify clear inefficiencies, then there may be a case where betting on an outcome is not an unwise use of money. However, my work at best will identify inefficiencies in the betting market compared to my model, not compared to the actual probability of a goal being scored. Without being able to see the future, it's impossible to assess truly whether or not betting markets are efficient.

However, I'm finding it a lot of fun modelling, or trying to model, goal arrival in football matches using duration models. I'm not making a lot of progress, as I've had to try and get my head around Stata, but hopefully I'll make some progress soon.

Another point I've been pondering on a little, and was given a little insight yesterday on, was that of econometrics assuming everything is random. Well, the assumption that we model everything as a random variable. This does not conflict with the idea that there is a God behind it all, and that in fact outcomes happen with a probability one as far as God is concerned, because He intends them all. To us, as they unfold, they can appear probabilistic, and it is the best way to model them, both in economics and econometrics, as random variables. In econometrics, some true underlying data generation process is always assumed, which we aim for but can never know whether or not we achieve it.

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At 8:48 am, Blogger Dirk said...

Well I don't think duration models for goals will get you anywhere. Do you use independent variables or just time?

You can prove efficiency without looking into the future, that's what financial econometricians can do.

I think the only inefficiency is if a pundit does not assign the right probability to an event.


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