Jonah Goldberg asks...

..."Is Intrade really that useful?":

From what I can tell, the “prices” for shares in political candidates have been all over the place over the last year. So how predictive are they, really? It seems to me they don’t really measure the likelihood of anything so much as the prevalence of certain aspects of conventional wisdom. It’s a clever way to poll people in a given moment, not some ingenious new mechanism for gleaning the future.

When I complain about Intrade to some of my Intrade-obsessive friends, they say that the numbers change because the facts on the ground change. And in the end, the accuracy is great. Well, first of all, isn’t that true of conventional wisdom, pundits, polls, etc. too?

(Read the rest of it here.)

My answer to Mr. Goldberg is, yes, Intrade is definitely that useful. In fact, you can pretty much ignore all the other polls and pundits and just consult the Irish betting Web site. And it's faster, too -- like the difference between high-speed DSL and dial-up Internet service.

Take last week, for example. After Newt Gingrich's dramatic victory over Mitt Romney in South Carolina, the former Speaker came into Florida with a head of steam. Everyone was talking about the "Gingrich surge." And then a funny thing happened: on Wednesday morning Gingrich went from a twenty point lead over Romney on Intrade to a twenty point deficit in the space of a few hours. I, of course, searched the Internet frantically (and in vain) for news as to why. For the next few days, the polls and pundits kept touting Gingrich even as Romney's lead grew. It wasn't until about Friday or so that the talking heads caught up with Intrade.

How does Intrade work? I'm not sure, but I have a guess. (Surprised?) While my son attributes its accuracy to the wisdom of crowds, I think the reason is simpler. I once heard James Grant say that before the SEC investors used to make money in the stock market the Old Fashioned Way: by trading on good, reliable inside information. And I suspect the same is true for Intrade. After all, how many people are actually betting on the Web site? I would guess not that many. Instead, I'll bet that the main players are Those In The Know, i. e., staffers, journalists close to the campaigns, etc. They see internal polls, judge crowd sizes and enthusiasm, and talk to other insiders. And they pick up on clues long before the polls or the "experts" on TV.

So while I'll admit that it's fun to look at polls, listen to the pundits on TV and read the various opinions on the Internet, at the end of the day it's most helpful to just consult Intrade.