ChainCatcher reports that, according to CoinDesk, a study by prediction market platform Kalshi found that prediction markets outperform Wall Street consensus forecasts in predicting inflation. Over a 25-month period, its average error was 40% lower than consensus predictions.
The study points out that the advantage of prediction markets lies in their aggregation of diverse information from numerous traders based on economic incentives, creating a "collective intelligence" effect that allows for a more sensitive response to changing environments. These findings suggest that market-based forecasting can serve as a valuable supplementary tool for institutional decision-makers, especially during periods of high uncertainty.
Kalshi's comparison of inflation forecasts on its platform with Wall Street consensus expectations revealed that market-based traders outperformed traditional economists and analysts in predicting inflation over a 25-month observation period, an advantage that was particularly pronounced during periods of economic volatility.
Specifically, the study found that from February 2023 to mid-2025, the forecast market's estimate of the year-on-year change in the Consumer Price Index (CPI) had an average error 40% lower than the consensus forecast. When the actual data deviated significantly from the expectations, the forecast market's advantage became even more pronounced, with its accuracy exceeding the consensus forecast by up to 67%.
