Prediction markets beat Wall Street in forecasting inflation, Kalshi says
Kalshi study shows its prediction market traders were 40% more accurate than Wall Street consensus in forecasting CPI over 25 months.Summary
A study by prediction market platform Kalshi, titled “Crisis Alpha: When Do Prediction Markets Outperform Expert Consensus?,” found that market-based traders consistently outperformed Wall Street consensus estimates in forecasting year-over-year Consumer Price Index (CPI) changes over a 25-month period (February 2023 to mid-2025). The market estimates showed a 40% lower average error than conventional forecasts, with outperformance reaching 67% during periods of sharp deviation from expectations. The study suggests prediction markets excel because they aggregate diverse inputs from financially incentivized traders, avoiding the shared models and reputational constraints that can hinder traditional forecasting. Furthermore, their real-time pricing avoids the lag inherent in consensus estimates. Kalshi suggests institutional decision-makers should consider incorporating these market signals as valuable, complementary information sources, especially during times of structural uncertainty.
(Source：CoinDesk)