Kalshi: Prediction markets outperform Wall Street consensus in inflation forecasting

BlockBeats News, December 22, according to Coindesk, a study by the prediction market platform Kalshi found that prediction markets outperform Wall Street consensus expectations in inflation forecasting. Over 25 months of data, its average error was 40% lower than consensus forecasts.

The study points out that the advantage of prediction markets lies in their ability to aggregate diverse information from numerous traders based on economic incentives, creating a "wisdom of the crowd" effect, which enables them to respond more sensitively to changing environments. These findings suggest that market-based forecasts can serve as a valuable supplementary tool for institutional decision-makers, especially during periods of high uncertainty.

By comparing inflation forecasts on its platform with Wall Street consensus expectations, Kalshi found that market-based traders had higher forecasting accuracy than traditional economists and analysts during the 25-month observation period, with this advantage being particularly significant during periods of economic volatility. Specifically, the study found that from February 2023 to mid-2025, the average error of prediction markets' estimates of year-on-year changes in the Consumer Price Index (CPI) was 40% lower than consensus forecasts. When actual data deviated significantly from expectations, the advantage of prediction markets became even more pronounced, with their accuracy exceeding consensus expectations by up to 67%.