Money talks, but does it always say the right thing? We compared the predictions of the BBC's soccer expert Mark Lawrenson with Pinnacle handicaps to see if the ex-Liverpool man is a better oracle than the market. Continue reading to find out the results.
We've discussed the dangers of following tipsters before, as well as championing our closing odds (a phenomenon called the Pinnacle Lean) and the importance of following the wisdom of the crowd. Now we've put the two together and compared the predictions of a high profile 'expert' with that of our opening odds.
We have recently continued this comparison for the 2016/17 Premier League seaon. Read the article here.
|Liverpool v Stoke||1-0||1-0||1-0|
|Arsenal v Aston Villa||1-3||1-0||2-0|
|Norwich v Everton||2-2||1-0||2-1|
|Sunderland v Fulham||0-1||0-1||1-1|
|West Brom v Southampton||0-1||0-0||2-1|
|West Ham v Cardiff||2-0||1-0||2-0|
|Swansea v Man Utd||1-4||0-1||1-1|
|Crystal Palace v Tottenham||0-1||0-1||1-2|
|Chelsea v Hull City||2-0||2-0||2-0|
|Man City v Newcastle||4-0||2-0||2-0|
Above is a table comparing Lawro's predictions for the first week of the 2013/14 season with those deduced from our Premier League handicap markets. Lawrenson impressively predicts the correct outcome in five of the ten ties, giving him a 50% prediction rate for week one.
With three possible outcomes for each game, this means a random selection would provide an accuracy of 33.3%, so the BBC pundit has clearly outperformed pure randomness.
However, he's still less accurate than Pinnacle, whose handicaps predicted six correct outcomes (or 60%). And remember, it's not just the accuracy of the Pinnacle's traders who are on trial here. It's also our bettors, because their volume shifts where the handicap sits at the start of the game.
Of course, such a small window (just one week) doesn't comprehensively show that the markets were a better predictor of outcome than Lawrenson. For that, we'd need to check a whole season's worth of data.
How do handicaps predict outcomes?
The handicap predictions were formed by choosing which match outcome the handicaps leaned closest to.
For example, Chelsea were favourites at -1.5 vs. Hull City, which meant they were expected to win either 2-0 or better, or win 1-0 or worse. Either way, it's still a win for the Blues.
In the battle of a BBC tipster vs. Pinnacle traders and bettors, the latter won by over 5%.
Games with handicaps of zero were set as 0-0 draws (even if their were favourites for one side to win the game), while mixed handicaps (at 0.25 or 0.75) were rounded upwards to a represent a full goal.
2012/13: Markets more accurate
Over the whole of the 2012/13 season, Lawrenson continued with an impressive prediction accuracy, correctly getting 200 of the 380 outcomes - a 52.6% accuracy rate. Unfortunately for Lawro, this means he was less accurate than the handicaps, which offered 210 correct outcomes - or 55.3%.
In the battle of a BBC tipster vs. the Pinnacle traders (with some added wisdom of the crowd), the latter won by over 5%.
It's an interesting result, especially considering BBC Radio 4's statistician Ben Carter made the bold claim back in May that Lawrenson had 'beaten the bookies' with his predictions. Carter's calculation was based upon using the favourites from 1X2 markets, which overlooks a key fact: draws are massively underrepresented in these markets.
A draw will almost never be the favourite in the 1X2 markets, but 27% of games ended with honours even last season. That's a huge number of games removed from the bookmaker's side of the argument. By moving to handicaps instead of 1X2s, the draw is better addressed - and the results improved.
When Carter informed Lawrenson of his success, the ex-Liverpool star made perhaps his most accurate statement: "in my experience, [bookmakers] don't get too many things wrong."