Perceived wealth from bets leads to unstable consumption and societal risk
The article explains how changes in people's beliefs about future gains from bets can lead to fluctuations in consumption, even when the economy's basic conditions stay the same. This perceived wealth from expected bet wins, called pseudo-wealth, can cause instability in both individual and overall consumption levels. Creating new betting markets can increase risk and lead to lower welfare in the long run, despite initially seeming beneficial. Using consistent beliefs can help avoid these issues.