It has been about two weeks since I last looked at the prediction markets for the invasion of Ukraine. Since then, prices on many markets have shifted quite a lot, so it is once again time to examine what the markets seem to be telling us.

Due to time constraints of various sorts, I have needed to split off both the discussion of how we might improve Metaculus, Polymarket and other prediction markets (other than a few markets I suggest adding) and also discussion of big markets like grain, oil and currencies that can serve as noisy but very useful predictive proxies. I hope to get to all that soon.

Kyiv

I still see some reports that Russia is attempting to ‘encircle’ Kyiv, but I no longer take them seriously. They are setting up defensive positions in various places, and if anything Ukraine is launching counter-offensives. Russia’s own official line is that the attack’s goal was to tie down Ukraine’s forces.

That doesn’t mean they couldn’t possibly ever do it, but it would presumably only happen after a complete Ukrainian collapse elsewhere.

Will Kyiv fall by April 1? (14% → 0%)

No. Can’t happen at this point. This closed so can’t move any lower.

Will Kyiv fall by June 1? (39% → 3%)

Again, no. In theory could happen, but it won’t.

The circles are my predictions. You can see the problem with ‘keeping pace’ with things as something falls over time. If I’d had better tools I’d have been lower along the way.

Will Kyiv fall by 2023? (45% → 9%)

I mean, possibly? But again, not really, no.

If Kyiv falls in 2022, when will it happen?

Notice the drop-off in participation. Here is what the distribution curve looks like (I set the input to flat to avoid distraction, ignore that).

Note that the 6% chance of Kyiv falling after June 1 but during 2022 has remained unchanged. The market already understood that there was little chance of Kyiv falling slowly rather than there being a settlement or things becoming a stalemate. Given that a third of worlds where Kyiv falls earlier have now been ruled out, this could be viewed as being conditionally slightly more likely, which is a mistake, it seems clearly conditionally less likely given Russia’s increasing focus elsewhere and willingness to settle for territorial gains.

It also doesn’t make sense in the same world as a collapse of the chances of it happening in April and May, to then have changes after May to have gone somewhat up, especially given the above graph. So there’s a small contradiction here, likely due to inertia and lack of arbitrage.

The key thing to know is that two weeks ago the market was saying Kyiv was 45% to fall this year, and if Kyiv falls Russia probably ‘wins’ a major victory. Now that is down to 9%.

On a related note: Will Medvedchuk become president of Ukraine before 2024?

There is still a 9% chance Kyiv falls in 2022 and then there’s all of 2023. But he’s also one choice out of many possible choices even if Russia does fully win.

Kharkiv

Will Russia get control of at least three of (Kyiv, Lviv, Odesa, Mariupol, Kherson and Kharkiv) by June 1? 70% → 7%

Will Kharkiv fall by June 1?

Even more than before, the overall market on the six cities is now mostly a market on Kharkiv. Kyiv, Lviv and Odesa are highly unlikely to fall without a general collapse. Kherson and Mariupol will count as having fallen, or if they don’t then Kharkiv was in almost no danger. So these are now the same. It is a good sign that Metaculus users collectively reached the same conclusion.

There are no individual markets on the other four cities. Given what is happening, I do propose that we have a new market on Kherson:

M1. Will Ukraine retake Kherson by June 1?

Further Invasions

Will Belarus invade Ukraine by June 1, 2022? (new → 12%)

If this was going to happen, chances are it would have happened by this point. There is clearly pressure on them to do it, there were provocations designed to draw them in, and nothing happened. It still could happen, but it seems unlikely.

Will Russia annex Transnistria in 2022? (15% → 5%)

Community has reached the conclusion Russia will have other things to worry about, and I concur in this.

Will Russia recognize Transnistria in 2022? (35% → 35%).

It seems hard for this to still be at 35% with annexation at 5%, implying that most of the time that they recognize the territory they do so without any ability to annex. I don’t want to go too far against consensus on something I know little about, but I’m lowering my prediction a bit here to 20%.

Will Russia invade another country in 2022? (10% → 4%).

As written this only requires 100 ground troops. Thus this could resolve positive if they do something like interfere in Armenia/Azerbaijan without permission, or otherwise be the result of a minor incursion. Also all the 5% that they annex Transnistria seem like they would be invading it. So this needs to be higher even if you fully discount Poland or the Baltics or Kazakhstan. My 8% is a concession to the markets generally seeming sane overall.

Will any NATO country invoke Article 5 by 2023? (4% → 5%)

The version for June 30 is still 4%, so only 1% of the rest of the year, which seems low.

Given Russia is only 4% to invade another country and a lot of that is other places, this not moving means a higher than before chance of a non-invasion triggering article 5. Presumably that is something like Russia going after equipment being sent in from Poland, or launching a retaliatory strike of some kind from the air. That does seem like it has gone at least somewhat up.

Here’s the real money version, note it ends earlier on June 30 yet is still at 7%.

I’m splitting the difference, I’m at 5% for June 30 but 7% by end of year. Real money markets with long shots tend to be a little high.

Civilians

Will Russia use chemical weapons in Ukraine in 2022? (new → 25%)

(Note: Moving my prediction to 24% lowered the community to 25% from 29%)

I can see Putin making either choice here, but I am leaning that it won’t happen. First, if Russia was going to do this, it likely would have done it already. They already set it up in propaganda terms, so either it was a feint or they saw the likely reaction and pulled back. Second, the cost/benefit here does not look good. The counter-argument is that this is what someone like Putin would do here, and what he has done in the past, so he will do it again.

How many internally displaced Ukrainians in 2022? (4.4mm → 9.2mm)

One of those weird distributional questions. Seems like the earlier estimates were mostly mistakes and this is less new events happening than new understanding.

Will there be at least 25k deaths? (Resolves Yes)

I mean, yes, this already happened, but I don’t put numbers at 99% until I have better faith in the resolution mechanisms.

Will there be at least 50k deaths? (60% → 75%)

My doubt on this comes primarily from not knowing what exactly will count, and seeing signs they may only count specifically known deaths. In that case, if things wrap relatively quickly we could stay under this, but the probability is rising to reflect that things are unlikely to wrap up quickly – if Kyiv had fallen already we’d have been a lot more likely to stay under.

Will there be at least 100k deaths? (30% → 28%)

It is always strange and often suspicious when these markets move in opposite directions. It implies we have a lot more clarity about what may happen, but it does not seem plausible to me that this probability has gone down over a period in which a fast Russian victory has been eliminated as a possibility. Things dragging out long enough for this seems very possible, and also Russia shows signs of willingness to inflict civilian casualties. I’m not going to adjust my prediction right now, but I will be suspicious.

Will at least 50k civilians die in at least one major Ukrainian city in 2022?

Mariupol’s population was 450k, so this would require things to get very bad there, or alternatively they could do something to Kyiv perhaps. I don’t have a good sense of situation in Mariupol but a 12% casualty rate does not seem at all impossible.

Will there be 5 million refugees? (77% → 90%)

Does seem like it, although I think it’s not quite as done a deal as that yet. Would likely change my mind if I looked more but whether it’s 4.8 or 5.5 does not seem worth the investigation. It does not much change what must be done at this stage.

The End

Will there be a 30-day ceasefire or peace agreement in 2022? (70% → 75%)

I guess this still seems probable, and negotiations are ongoing with possibility agreement could be reached at any time. But the possibility of either a frozen conflict or an ongoing war seems highly plausible as well, so the question is how things have changed. Negotiations do seem like they could be close on things other than territory, but if Ukraine can’t give up what Putin personally needs to claim a win, then this could drag on quite a while so long as Russia holds territory it wants to keep. I worry this is high.

Will Putin be President of Russia on February 1, 2023? (81% → 81%)

Once again, this movement is really weird, because it implies that his chances of surviving a losing war are steadily improving such that the prediction holds over time, check out this straight line…

The day before I wrote this, Biden said Putin ‘cannot remain in power.’ No change in either direction. The fall of Kyiv would have almost certainly made Putin safe, it went from 45% to 9%, and still the same 19% chance Putin falls? I do not buy it. The war is going terribly, and I do not think the ‘if it was going to happen it would have already’ argument carries much weight. This market is not being consistent.

After I wrote this, I checked Polymarket, and real money talks at least a bit, this is currently at 73% and ends a month earlier.

When I try to steelman these probabilities, it comes back that the dependence of Putin on winning the war is wrong, and what matters is the impact of the sanctions? But that very much goes against what essentially everyone on all sides is saying.

Quite the contrary, I’d suggest taking this suggestion seriously and seeing if we should actually be worried about the end of Russia. Also note this talk on official Russian media about exactly that – the end of Russia. So…

M2(a-c). Will territories with a population of (1/10/50) million or more, that are recognized currently by the United States as being part of the Russian Federation, cease to be recognized by the United States as part of the Russian Federation by 2025?

Yes, good chance they simply sit at 1% or what not, but still. Note that Chechnya is over 1 million people.

And as per my discussion last time:

I realize these are a mouthful, but if you look at many other markets they are as well. If one wants ‘clean’ markets we can (and likely should) then break them up into subcomponents.

M3. Will there be a formal peace agreement between Ukraine and Russia by [date].

The version at Metaculus includes an ‘extended cease fire’ and the lines are of course easy to blur between them, but I’d define a formal agreement as ‘all territory under each side’s control is recognized de jure as theirs by the other party, or the parties agree on a mechanism for determination of ownership.’

M4+. If there is a peace agreement or other clear end to the fighting, will Russia:

1. Win a major or total victory? Meaning at least one of: Russia sets up a puppet government in control of Kyiv, Russia annexes Kyiv or Ukraine accepts major limits on its ability to defend itself beyond non-alignment and a lack of nuclear weapons, as defined by either a force limit of 250,000 troops or less, or major limits on its ability to procure weapons or planes.
2. Win any victory at all? Meaning either ALL of the following conditions must be fulfilled: [(A) DNR/LNR/Crimea are de facto controlled by Russia, (B) Ukraine agrees never to join NATO or host foreign troops, (C) EITHER Ukraine agrees not to join the European Union OR Ukraine loses additional territory at least as substantial as a land bridge connecting Crimea to Donetsk.] OR if some of the above conditions are NOT met, other conditions are imposed that are clearly at least as important to Russia.
3. Avoid a major defeat? Meaning (A) Ukraine agrees to not join NATO and (B) Crimea and the areas held pre-invasion by DNR/LNR are de facto controlled by Russia.
4. Will Ukraine regain de facto control of 50% or more of the territories of the DNR/LNR that it failed to control on January 1, 2022, by January 1, 2023?
5. Will Ukraine de facto control Sevastapol on January 1, 2023?
6. Will Ukraine de facto control Mariupol on January 1, 2023?
7. Will Ukraine, by [date], make a promise to never join [NATO/EU/EU Economic Community]?
8. Will Ukraine by [date] agree not to host foreign weapons or troops?
9. Will Ukraine by [date] get a security guarantee from the Russian Federation?
10. Will Russia de facto control a land bridge between Crimea and Donetsk on [date]?
11. Will Russia continue to recognize or claim to have annexed any additional new territories other than LNR/DNR within Ukraine’s 2014 de facto territory on [date]?
12. Will a Russian-aligned government control Kyiv on [date]?

Exactly which of these are most valuable I am not sure, but we really should have prediction markets that reflect who is winning.

I would also like to see questions about foreign assistance, and about further escalation of tensions between Russia and NATO (e.g. expelling of ambassadors and such), and other similar matters.

Polymarket

What’s the real money world up to?

Most of these low-probability events are overrated here, as they would tend to be, but I do not find them especially interesting. The interesting ones are the expansion of territory and the Putin market, with the Putin market discussed above.

Will Russia expand its number of federal subjects by July 1, 2022? (33% → 42%)

This happens if and mostly only if Russia absorbs one of the ‘republics’ it recognized. There is clear movement in that direction, regardless of who else recognizes it, and a lot of the question is about time frame. There is also the question of a peace agreement. A lot of the probability here comes down to timing and logistics, rather than the truly interesting questions, which is why I think a longer-dated version would be more interesting, and also it would be better off specifying the expansion at this point.

Will Ukraine formally cede Crimea, Luhansk or Donetsk by May 31, 2022? (24% → 23%)

This is asking if there will be a completed peace agreement, and also might as well only list Crimea. No peace agreement done this quickly won’t involve Ukraine giving up Crimea. A cease fire or other wind-down might not involve a formal concession, as Zelenskyy has indicated a willingness to allow Russia to retain control de facto – he has already said he won’t be invading Crimea no matter what – but a reluctance to recognize de jure. I’m happy this is as high as it is, but if anything I’d be a seller.

Insight Predictions also has some markets, but volume on all the unique ones are super low and the order books are tiny, so I don’t take them very seriously. They do have a 2023 Zelenskyy market, which seems reasonable at 77%.

Synthesis

As noted above, due to time constraints I’m going to wrap up here.

The markets seem to be on two tracks here.

First, they seem ready to acknowledge that Russia’s offensive has failed, and that it seems highly unlikely they will take Kyiv or other major objectives going forward, even over the course of the year.

Second, this seemingly has not crossed over into likelihood Putin falls, or done much to the probability of a cease-fire or peace agreement.

Together, these imply that either the two things were previously not very linked, which seems weird, or that the conditional probabilities have shifted quite a bit, or that the second set of markets should have shifted quite a bit more.

Another issue is that the markets here are growing stale, in the sense that probabilities are shifting towards 0% and 100% as we learn more, and the questions that are most interesting going forward are not stepping up to be offered as replacements. When I talk about potential improvements, I’ll also try to focus more on what would be most insightful now.

I hope that was helpful, and I hope to round out such topics more as time permits.