Buy Obama and Gingrich? (on Intrade)

This is another post about politics, but instead of telling you who (not) to vote for, I want to dip into talking about what, just as a matter of fact, is most likely to happen. The discussion is going to focus around Intrade, a site that lets you bet on the outcome of various events, including elections. As a fan of Robin Hanson, I’m inclined to believe that such prediction markets are the best thing we have for predicting the future, so my initial inclination is to believe Intrade’s numbers. Said numbers are below the fold:

% chance of various candidates to be Republican Presidential Nominee in 2012:

  • Mitt Romney, 88.6%
  • Newt Gingrich, 5.8%
  • Ron Paul, 3.1%
  • Rick Santorum, 1.6%

% chance of various candidates to be elected President in 2012:

  • Barack Obama, 54.0%
  • Mitt Romney, 40.8%
  • Newt Gingrich, 2.3%
  • Ron Paul, 1.6%
  • Rick Santorum, 0.5%

My biggest reaction to this is that the odds they’re giving for Gingrich to win the nomination are way too low, given that Gingrich is currently beating Romney in national polls. It would be one thing to say that Gingrich will probably lose because the Republican establishment will fight mightily to convince Republican primary voters to pick the more electable Romney, but a 5.8% chance still seems too low. My guess is that the people playing Intrade are giving too much weight to the fact that Romney is going to win Florida tomorrow night, and if that’s right, now’s the time to make a cheap bet on Gingrich getting the nomination.

My other reaction is that the odds they’re giving for Obama are also too low. I doubt Romney can beat him: Even if he gets the nomination, Romney will have trouble generating enthusiasm with the Republican base due to his Mormonism and flip-flopping. The strong similarities between Romneycare and Obamacare prevent Romney from being a credible critic of Obama’s main domestic policy achievement. And perhaps most importantly, I just don’t see American voters being sold on the proposition that the solution to their economic woes is to elect a guy who’s twice as rich as the last eight presidents combined, and who is campaigning on a platform of massive tax cuts for rich guys like himself.

Gingrich avoids most of these faults (except that he’s still committed to cutting taxes for the rich), but at the end of the day most voters just don’t like him. Polls consistently show voters favor Obama over Gingrich more strongly than they favor Obama over Romney. Also, Gingrich has really high unfavorable ratings. So I think Obama is safer than the 54.0% number would suggest, and he’s also worth betting on on Intrade.

However, I still worry I may be missing something important. This is especially true with Obama’s re-election chances. Though I personally dislike him, I’m not sure I know anyone who wants to vote for Romney or Gingrich, even though plenty of them are out there. That may be distorting my expectations about what will happen here. So advise me here, people. Should I be placing these bets on Obama and Gingrich or not?

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