The Winton Climate Prediction Market
Prediction markets are markets specifically designed to reveal information. They share many features with traditional gambling and financial markets, but the latter are primarily designed to provide entertainment or risk transfer. For the operators of these markets, whether bookmakers or exchanges, the discovery of information is merely an advantageous side effect.
The idea of using a prediction market for climate change was first suggested more than 25 years ago by the US economist Robin Hanson. Since then, other economists, scientists and lawyers have elaborated on the idea, but no long-range prediction markets for climate have been established.
Before launching a long-range prediction market for global climate, Winton is running a competition in which teams from UK universities can compete to predict monthly UK temperature and rainfall up to several months into the future. The competition uses “play money” rather than real money, but Winton will award £55,000 in cash prizes to the institutions of the top 10 performing teams, including £10,000 to the winning university.
Prediction Market Lead
The lead on the project is Mark Roulston, a Managing Director within Winton’s Research division. Before joining Winton in 2007, Mark worked as a Probability Forecast Application Specialist for the UK Met Office, where he researched how to better integrate weather forecasts into decision-making.
Between 2004 and 2005, Mark was an Assistant Professor for the Department of Meteorology at Pennsylvania State University. Mark holds a BA degree in natural sciences (physics) from Cambridge University, and a doctorate degree in planetary science from the California Institute of Technology, where his thesis topic was the Dynamics of El Niño-Southern Oscillation.
Winton has a history of engaging in scientifically-oriented philanthropy, with a particular interest in promoting the understanding and communication of risk. It was this interest that spurred us to explore setting up a prediction market for climate change stretching up to several decades into the future.
The design of the Winton Climate Prediction Market was borne out of a workshop that Winton convened in 2016, attended by a mixture of economists, market infrastructure and climate specialists.