J.N. Campbell: Fast Decisions and Behavioral Economics in Horse Racing

J.N. Campbell's commentary on a new behavioral economics study which examines the betting on horses that are named with words like 'fast.' Do they get wagering on more or less? Have a read ...
J.N. Campbell's commentary on a new behavioral economics study which examines the betting on horses that are named with words like "fast." Do they get wagering on more or less? Have a read ...

The handicappers of America are in a highly speculative business. It is not quite the lumber market of late, but … For some, it ranges somewhere between wildcatting out in West Texas, and base jumping off the KL Tower in Malaysia … figuratively speaking.

When it comes to “horseplayers,” they combine a strange concoction of superstition with past precedent. One would like to think that they are scientists more so than tarot card readers. Some are on the phone, pacing slowly; either doling out tips, or intently listening to a supposed qualified source. When the anonymous deliver, they are instantly known by all … a soothsayer of renown. Think town crier … When it doesn’t … think the stocks in the square.

Racetrack culture is full of genuine and original “wildcatters,” who are just waiting for you to ask them the “Question.” That being … “Who do you like?” Betting methods are endlessly fascinating. Participants devour the “Form” in all sorts of ways. Some wait right up until the race goes off to look at it, while others prepare days in advance … hoping to unearth some numeral or meaningful sign that their selections can lead to cashing tickets. Everyone that participates in making a wager receives a permanent record, either on paper or digitally, of an opinion that at one point they thought might be correct.

At different points in the year, casual horseplayers arrive on the scene like tourists. Wearing their shiny white tennis shoes, cameras around the neck at the ready, and holding up their tri-fold maps like in one of those string of Chevy Chase Vacation films. They are hoping to “stump the chumps.” If they win, exuberance is a tidal wave, but if they lose, they might not return—at least until next year. More professional track-goers know better, and they can temper wins and losses.

Over the course of my own experience in different betting milieus, I have often wondered about how much the names of horses can influence the wide spectrum of those that place bets. Are they really as good as they think they are, those novices to the veterans, when it comes to dealing with this issue? Could they be unduly influenced by such an arbitrary thing as this appears to be?  

A recent article in the Journal of Behavioral and Experimental Economics entitled, “Sonic Thunder vs. Brian the Snail: Are people affected by uninformative racehorse names?” probed some of these questions. In other words, turning to those that examine Behavioral Economics might provide some intriguing answers.

In this particular study, a triad of scholars from the Department of Business Administration at the University of Zurich (Oliver Merz, Raphael Flepp, and Egon Franck) wanted to take a deep dive into the world of “affects.” That being how decision-making and market efficiency play in the world of horse racing. Our sport, they tell us, is particularly interesting because data is readily available to measure things like investment, choice, and result.

What they uncovered was some fascinating material about the habits of mind when it comes to choosing horses. Betting decisions they say are affected by uninformative racehorse names! They looked at over 400,000 contests between the ten-year span of 2008 to 2018, developing a long list of words from the Oxford Dictionary to cover anything that related to the word “fast.”

What they mined from countries across the globe (including the U.S.), is that when a “fast-sounding” horse was entered in any given race, the probability of them winning was “overstated.” To put it another way, the returns, the ability to cash a ticket, were actually lower compared to bets on others.

Wait, what … you say? A horse with the name “speed” was overly bet when compared to one with “slow” in it?

Correct … with all the collective knowledge available in the sport of horse racing, and with all the professional supposed “opinions” that are out there, something as trivial as this could have a major impact on the betting market. I find that both disturbing and captivating.

Of course, betting on a horse always has elements present where bettors do not have all of the knowledge at their disposal they could; to make could be called an “informed wager.” But choosing a horse based on its name only, I would say is universally scoffed at by those that consider themselves “in the know.” Ask any of the National Handicapping Challenge (NHC) players in Las Vegas when they attend the tournament there, if they make their selections based on names, and you would probably get some wry smiles along with legions of shaking heads. It is simply not done … they will say.

However, we are talking about the depths of the human mind here, aren’t we? It has twists and turns, fissures like a maze. As Freud and Jung began to tell us in German over a 100 years ago, the subconscious is a tricky business.

That is why we need departments in colleges and universities that examine topics such as behavioral economics. It can follow lines of inquiry, cross-pollenate, and uncover truths we might not have thought existed. By the end of the piece, the authors make some rather sweeping suggestions about society at-large, and whether this kind of “affect” plays out on a larger scale. They are on to something. Has horse racing once again provided the world with a window into actions of a much broader audience? Perhaps …

What we do know is that track culture has a niche of behavior that is intimately tied to one’s own pocketbook. Just like buying on Amazon during “Prime Day,” or purchasing a stock on Robinhood, those decisions about why we do what we do, reflect greatly on who we are as both individuals, and as a collective, “People.” We might not want to admit it, but sometimes those choices turn out to be pretty uninformed.

The next time you are out at the racetrack, surveying the PPs for a race at say, Belmont, watch out for those "speed" horses. As for those names … your mind might be leading you down the wrong path. That goes double for you, wildcatters … knowledge in this case, is not as apparent as it might seem.