Authors: Garth Sundem
Here’s another tip that Winston recommends (via an article by the economist Steven Levitt): People like to bet NFL favorites. Bookies discovered this, and if the point spread in a certain game should statistically have been +9, bookies found they could set the line at +10 and people would still bet the favorite. Adjusting the line created slightly more losing bets and thus slightly more money for the bookies. Combine this with a hometown favorite and you have a powerful engine of irrationality—emotion leads
fans to overbet hometown favorites, and so you can sometimes find unreasonably good odds if you’re willing to bet the opposite: Go for visiting-team underdogs, which are statistically likely to cover the inflated point spread.
But if you’re looking for consistent money in sports betting, there’s one easy rule: Stay away from data. “Where there’s not good information, there’s inefficiency. And where there’s inefficiency, there’s money to be made,” says Winston. Like the stock market, there are enough people running enough numbers and placing enough bets on football, basketball, and baseball that it’s extremely difficult to find something that no one’s thought of. Unless you can find and act on information no one else has (insider trading), you’re unlikely to beat the opening line 52.4 percent of the time in the big three sports. (Try cricket, says Winston, because the information and the people evaluating it aren’t yet supersaturated.)
Puzzle #2:
Dr. Stat Cricket Prop
Dr. Stat (as in, “Get me 1,000 cc of espresso, stat!”) specializes in betting on a specific cricket bowler. Bookies know that each time the bowler throws, he has a 1/46 chance of knocking the wickets. So betting that any single throw takes a wicket pays forty-six times your wager for a win (for simplicity’s sake we’ll assume no bookies’ rake). What makes this a special prop is the fact that Dr. Stat (and only Dr. Stat) knows this bowler is a cold-weather specialist. When it’s below 15°C this bowler adds 1 percent to every throw’s chance of taking the wicket. And so Dr. Stat follows this bowler and follows the weather and bets accordingly. If he lays $1,000 per wager over one hundred cold-weather bets, how much money should he expect to win?
The Chevalier de Méré was a seventeenth-
century French writer who liked to gamble. Or was he a seventeenth-century French gambler who liked to write? Either way, dupes caught on that de Méré’s meat-and-potatoes bet—that he could roll any prenamed number in four tries with a six-sided dice—was stacked against them. And so de Méré went a step further, betting he could roll boxcars (double sixes) in twenty-four tries with two dice. That makes sense: The first seems like 4-in-6 odds and the second seems the same only dressed up to look trickier at 24-in-36 odds.
Only it’s not nearly that simple. Over time the bet just didn’t seem to pay off. But why? In his book
What’s Luck Got to Do with It
, Marlboro College mathematician Joseph Mazur explains the odds. Let’s look at the first bet, first.
Rolling one six-sided die four times yields 6
4
, or 1,296, possible patterns—you could roll 2, 2, 2, 2 or 3, 5, 4, 6 or 1, 5, 6, 2 etc. through all 1,296 possible combinations. But in 5
4
of these, you lose—these are all the ones without the number you want—625 ways to lose in all. But check this out: This means there are 1,296 – 625 = 671 ways you can win! Trying to roll a specific number with a six-sided die thrown four times, you win more than you lose, and so it’s a good bet for the roller. In fact, the bet has a 671 ÷ 1,296 = 0.52 probability of paying off.
Now let’s look at de Méré’s second bet: boxcars in twenty-four tries. There are thirty-six different combinations you can get by rolling two six-sided dice. So if you roll these two dice twenty-four times, you can come up with 36
24
possible combinations; 35
24
of these combinations lose. These are really, really big numbers that you most certainly don’t want to see printed here, but take Mazur’s word for it, there are slightly more ways to lose than to win—there’s only a 0.49 probability of winning the bet. As de Méré ascertained by his dwindling bankroll, that’s bad.
But just one more throw tips the probability over 0.50. So there’s another bet you can win: boxcars in twenty-five, not twenty-four, tries.
If you insist on betting big sports, Winston recommends prop bets. These are the strange, in-the-moment conjectures that have become all the rage in Vegas. At the 2010 Super Bowl, the line was 5.5 on how many times the Who’s Pete Townshend would do his windmill move. And the line was 2.5 on how many times CBS would cut to Kim Kardashian in the stands.
In the case of prop bets, bookie kung fu may not be very strong. If you can specialize in a certain kind of prop, you may be able to outmaneuver the underpowered bookie underling setting the line. Maybe you can ferret out information or design a more accurate model that allows you to know a bookie’s line is a little high or a little low on something like the number of times a certain lineman will be shown firing snot rockets, or how many players in a given season will be fined for comments posted to Twitter.
Or you can run your own prop.
Find something interesting that you think you’ve got a good line on (see above). And then prop it with odds that only you know are slightly off. Bet to win. Can you prop bet the office pool?
Luxury is a status symbol. You tote a $37,000 Hermès Birkin handbag or drive a million-dollar McLaren F1 to show that you have the wealth to do so. It’s a signal that you belong in society—some would say a signal of genetic quality and mate desirability.
At least that’s the popular theory.
Niro Sivanathan, professor of organizational behavior at the London Business School, took the theory into the lab to kick the tires. Specifically, he gathered 150 subjects and made them feel bad about themselves. With self-worth thus threatened, subjects
said they’d pay more for luxury cars and watches than did subjects allowed to retain their self-worth. Interestingly, though, devalued people’s valuation of ordinary goods—ones that had no relation to status—was unaffected.
In Sivanathan’s words, “Subjects with low self-esteem sought to heal ego threat with consumption of status goods.” If you feel your inherent worth is lacking, you seek to buy your way back to a full self.
So don’t shop when you feel crappy about yourself. You’ll overspend.
But that’s just the start.
In a follow-up study, Sivanathan measured the natural self-esteem of a cross section of American consumers. Then he had subjects read about and suggest a price for a luxury car. As you might guess, people below the average income of $50,233 had significantly lower self-esteem. And these people said they would pay more for the car. “People of low socioeconomic status naturally experience higher levels of threat to self and can be prone to overconsumption of costly, showy goods,” says Sivanathan.
This was especially true when credit was involved, which offers less sense of something of yours being transferred to someone else (see this book’s entry with Brian Knutson).
And these are the components of what Sivanathan calls “consumption quicksand.” “Low self-esteem leads to more consumption on credit, which leads to debt and lower self-esteem, which leads to more consumption,” he says. “It’s a dangerous positive feedback loop.”
Does this quicksand look familiar? If so, you need to break the loop. And Sivanathan knows how.
In a follow-up study, before presenting devalued subjects the chance to splurge on luxury, he encouraged them to reflect on meaningful things—family, health, well-being. Thus recentered, subjects were less likely to overprice luxury goods.
“One reason people consume is to protect the ego,” says Sivanathan. But there are other ways to feel good about yourself, including spending time thinking about what’s important to you. So in addition to not shopping when you’re down, before you walk through a mall-entrance department store, or before you stroll through a car lot on the hunt for a minivan though tempted by a Porsche, take a minute to reflect on your priorities. You’ll shield yourself against the mistaken idea that you can buy the missing chunk of your self-esteem.
Niro Sivanathan also explored corporate
promotion tournaments, which are competitions with rules and contestants that are commonly used to fill open executive positions. “Just like Barry Bonds used steroids to hit more home runs, organizational actors sabotage, bribe, and assume high risk to get ahead,” says Sivanathan. As on the show
Survivor
, competitors in these tournaments also start by eliminating the weakest links, but switch strategy at the midpoint to eliminate the strongest competition. “In this way companies can ensure they instate the best manipulator as CEO and not the best businessperson,” says Sivanathan.
As a former SoCal transplant, I went surfing thrice in three years, all when gung-ho friends visited with the idea of catching a wave, snapping a pic, and posting something to Facebook that would make friends in the rainy Northwest or icy Northeast feel even worse about their environs than they did already. And after each of these three sessions, I was completely
flabbergasted by something I may otherwise never have had the opportunity to notice: how much salt water the human sinus cavities can hold. Really, days later I’d be leaning over to tie my shoes and a stream of water would leak from my nose. I imagined that when the same happened to my friends, now back in some office in Seattle or New York, they used the salt water as a welcome conversation starter about the gnarly waves they shredded off the SoCal coast. Does this kind of thing win dates in the lands of rain and snow, or does leakage from one’s sinuses remain repulsive no matter what?
Anyway, the roundabout point is that there are many steps before hanging ten. The first is catching a wave. (Actually, the first is finding the right point in the right wave, but that’s another long hydrologic story.) It seems easy: The wave pushes, your board moves, and you stand up. But, “catching a wave is actually an amazingly complex computation,” says Paul Doherty, who earned a PhD in physics from MIT and taught at Oakland University before founding the Center for Teaching and Learning at San Francisco’s Exploratorium. Beginning surfers paddle and kick furiously. Experienced surfers “know the wave and know their bodies, and can match the wave’s speed in a couple strokes,” says Doherty. If you’re too slow, the wave pushes right past you. Too fast and you’re out ahead—and when you slow down from fatigue or to let the wave catch up, you’re too slow and it blows right past you.
So watch from the shore as sets roll in—how much paddle power do the best surfers need to match the waves’ speed? And try chasing a couple waves after they’ve rolled past to get a feeling for how hard you have to paddle to keep up with them.
Then there’s the matter of where to stand on the board—the genesis of most of the salt water in my sinus cavities.
“Every surfboard has a center of buoyancy,” explains Doherty.
This is the point where, if the board was floating in the water, you could push down with your fist and the entire board would sink equally. And a surfer has a center of gravity—the point over which your mass pushes directly down. “If the center of gravity is behind the center of buoyancy, the tail of the surfboard sinks and the nose comes up,” says Doherty. This causes the board to decelerate and pull back through the wave. The opposite is my nemesis: As a surfer’s center of gravity moves ahead of the board’s center of buoyancy, the board’s nose digs beneath onrushing water, sending the would-be surfer tumbling, and compacting salt water deep, deep into the sinus cavities.
But imagine if you get the speed and the centers of mass/buoyancy right. Finally you’re standing! You’re really standing! “You’re on a strange sliding board riding down an up escalator, which also happens to be moving forward laterally,” says Doherty. After sliding straight down the wave’s face, if you somehow avoid digging the nose of your board into the trough at the wave’s base, your momentum takes you far ahead of the wave … at which point you decelerate, start to sink, and are flattened by the wave as it catches you, prone and quivering.