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?

  • Nomen Nescio

    bet on Gingrich to be nominated, for precisely the reasons you outline. however:

    Even if he gets the nomination, Romney will have trouble generating enthusiasm with the Republican base due to his Mormonism and flip-flopping.

    …Obama too will have trouble generating enthusiasm with the Democratic base due to… oh, let’s not even get me started on what all Obama has done precisely, exactly, pathologically wrong. my blood pressure’s too high as it is. let’s just say i can’t vote for him again, he’s demonstrated himself to be much too reactionary.

    yeah, he’ll probably still win reelection, and yeah, he’ll probably be a less evil lizard than whichever republican lizard runs against him. but he’s a bad enough lizard that he’ll damn well have to win without my help. if i can’t vote for someone i could actually support, i’m not voting at all; voting merely against the greater evil is wasting my vote, in my opinion.

  • ‘Tis Himself, OM

    So far, Romney has only won in states where he owns summer houses, like New Hampshire. Money doesn’t always buy elections. In Iowa, he was narrowly defeated by Santorum, an underfunded candidate who Romney outspent more than two to one. In South Carolina, Romney was crushed by Gingrich’s 13-point win even though Romney outspent Gingrich by three to one.

    In New Hampshire, Romney also spent heavily. More importantly, he was a “favorite son,” a familiar face and voice as a neighboring governor. And, of course, as he reminded voters repeatedly, he owned property in their state. Even so, he won with a less than commanding 39% of the vote.

    Romney has never won a majority (50% or better) of Republican primary or caucus voters. And, two-thirds of the time, he has had to spend vast sums just to claim the number two spot. The Florida primary may change that–but it won’t settle the issue of Romney’s electability. Romney enjoys leads in polls ranging from 5 to 15 points. But he and his super-PACs had to spend more than $15 million in television advertising and millions more in radio spots and targeted mailings. If anything, Romney’s price per vote is rising–an unsustainable model given campaign-finance limits.

    Meanwhile, Romney’s heavily negative advertising only drives Tea Partiers and other conservatives from one non-Romney candidate to another. Divide and conquer is a storied strategy; it may well work in Florida. But it doesn’t build votes for Romney. The non-Romney vote–despite millions of dollars, months of media coverage and lots of debates–remains stubbornly north of 60% among Republican voters. If Romney is going to defeat Obama, he will have to unite the Republicans behind him. So far, there is no evidence is any state that he can do just that.

    Indeed, Romney’s nomination presents the real risk of a third-party presidential challenger, a candidate who hopes to gather libertarians, Tea Partiers and conservatives disaffected with Romney. Sure, that candidate would win, at most, 2% of the vote–but that percentage would be enough to swing the election to Obama.

  • jimnorth

    The Iowa Electronic Market (http://tippie.uiowa.edu/iem/) has Romney at 89.3 cents and Gingrich at 6.5 cents. Looks like the money is on Mitt.

    The money is also similar for the presidential race with 59.3 cents going to Obama and 41 cents to Romney. This number is also very similar to the ’08 presidential race at this time of the election cycle.

    Although these represent bid prices, I think one could convert them to chances of winning their respective races.


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