Blog Posts by David Pennock

  • If Romney wins South Carolina, he’s 95% likely to win Florida and Nevada too

    On the day of the Iowa caucuses last week, the prediction markets Intrade and Betfair gave Mitt Romney a 44 percent chance of winning the South Carolina primary. After barely winning Iowa and handily winning New Hampshire, Romney's chances in the Palmetto State now stand close to 70 percent.

    But Romney's rise does not necessarily reflect growing affection among conservatives in South Carolina, or any major shift in opinion away from Gingrich or Santorum, who have both fared well there at various points. Romney is winning mainly because, well, Romney is winning. If he does win in South Carolina, his odds of a clean sweep of the first five states--Florida and Nevada come next--will rise as high as 95 percent, according to the markets.

    At The Signal, we sometimes draw analogies between politics and football, and here is a great example of how the two sports differ. When the 13-0 Green Bay Packers lost to 5-8 Kansas City, as they did in week 15 this year, the Packers' odds of winning the

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  • Ron Paul winning the Twitter race, falling in prediction markets

    As the votes are being counted in Iowa, the twitterverse is ablaze with comments about #iacaucus. True to form, Ron Paul's hall-of-mirrors effect on the Internet is propelling him to win the race for biggest buzz, including most tweets and most searches.

    Ron Paul winning Iowa Caucuses Twitter race 2012/01/03

    Meanwhile, after taking a brief lead in the prediction markets, peaking near a 50 percent chance to win Iowa, Paul is now down again to just about 10 percent likelihood of coming out on top in the Hawkeye State. Mitt Romney has regained status as the favorite at 52 percent with Rick Santorum at 39 percent.

    Other interesting twitterbits: #sexdungeon is now a top trending hashtag for Rick Santorum, thanks to a prank by @BorowitzReport. Unrelated, we think: Mitt Romney's wife Ann is trending after her last minute appeal.

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  • Pro-Romney advertising did not wait one second of 2012

    The Times Square ball drop on New Year's Eve was officially sponsored by Toshiba, but if you tuned in right at midnight you could be forgiven for thinking Mitt Romney was bankrolling the celebration. As fireworks detonated to mark the first seconds of 2012, a red-white-and-blue "Mitt Romney 2012" billboard flashed behind the ball. An estimated one million people saw it in person (including me, from the comfort of Yahoo!'s Times Square office), and millions more tuned in on TV (in the past, ABC's special has attracted as many as 20 million viewers).

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  • In Republican debate, Gingrich and Romney make big bets

    Both Mitt Romney and Newt Gingrich placed prominent wagers in Saturday night's Republican Presidential debate. Romney's was spontaneous and flip while Gingrich's was calculated and quite cold. Meanwhile, prediction market traders bet on whose bet was best, giving Gingrich a significant edge.

    Romney, denying an allegation that he endorsed mandatory national health insurance in the first edition of his book "No Apology", put out his hand and challenged his accuser, Rick Perry, to a $10,000 bet to settle the issue. Perry refused the bet and smartly so. According to, Romney would have won.

    Commentators jumped on Romney as out of touch for blithely risking "more than some people make in a year", as one Yahoo! user put it, or 20 percent of the median American household's income. (That's 0.005 percent of Romney's own reported wealth.) Most debate reactions focused on the high stakes of the challenge or whether Romney's act violated his Mormon faith, but ignored the simple fact

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  • Prediction markets: Gingrich is electable

    Worried that the Democratic base won't muster the same urgency and energy it did in 2008, Barack Obama's campaign may be privately salivating over the prospect of a general election contest against Newt Gingrich. Arguably, the image of a President Gingrich should be even more horrifying to progressives than a McCain administration. Whether he deserves it or not, Gingrich embodies right-wing extremism in many minds.

    If, as conventional wisdom suggests, the general election turns into a race to capture votes from centrists and independents, Obama would seem well positioned against Gingrich. The New York Times's election number-cruncher Nate Silver projected Gingrich only half as likely to defeat Obama as Mitt Romney under current economic conditions.

    Democrats may want to be careful what they wish for. According to political oddsmakers on sites such as Intrade and Betfair, Gingrich has a strong 45 percent chance of defeating Obama in the general election should he emerge on top in the

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  • It’s the stock market, stupid? Why Obama is no longer the underdog

    Pretty much since the day he was elected president of the United States in November 2008, Barack Obama has been the favorite on prediction markets like Intrade and Betfair to win re-election for a second term, as most incumbents do. That changed in September and October, when the budget stalemate and grim economic news turned Obama, for the first time, into an underdog.

    But after bottoming out on October 8, when the prediction markets gave him a 48 percent chance of winning re-election, Obama has slowly and steadily climbed back to his August levels. His current odds, computed as an average of Intrade and Betfair, give him a 51.4 percent chance to win.

    Obama's poll results and approval ratings are ticking up now, too. While it's tempting to credit scandals (exhibit C and G) or infighting among Obama's potential Republican rivals, or Republican stubbornness in the ongoing deficit reduction debate, the simplest explanation harkens back to the signature phrase of Bill Clinton's first presidential campaign, "It's the economy, stupid."

    Brighter economic news and the prospect of a decent holiday season have handicappers wagering that economic conditions, or at least momentum, will be sufficient next fall that many voters will consider themselves better off in 2012 than 2008, and pull the lever for Obama.

    The stock market is itself a massive prediction market forecasting the future profits of American businesses. As such, the Standard and Poor's 500 index offers about as good a guide as any to the economic outlook ahead. In the last 90 days, the S&P 500 has tracked a remarkably similar course as Obama: declining in September, bottoming out on October 3, rising steadily through October until November before beginning a slight decline again on November 14.

    Obama's chances of reelection and the S&P 500 index price

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  • Proportional voting in the GOP primary won’t matter without proportional thinking

    This year, in state Republican caucuses and primaries held prior to April 1, presidential candidates will earn delegates in proportion to the percentage of the vote they win in the state. So, for instance, if Mitt Romney wins the Iowa caucus January 3, which the prediction markets project with 34.9 percent likelihood, he won't take home all of Iowa's delegates--as has been the tradition in past primaries and caucuses. Likewise, the second place finisher in Iowa won't walk away empty handed--another departure from past form.

    But what net effect will these changes create on the crucial early-primary race? According to the influential prediction market Intrade, the answer is likely to be "not all that much."

    On Intrade, political horse traders buy and sell shares in primary outcomes--essentially wagering on the odds that Romney, Rick Perry, Herman Cain, Newt Gingrich, Ron Paul or someone else, will become the GOP presidential nominee. InTrade participants also weigh in on likely outcomes

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  • Opponents of Protect IP Act stage American Censorship Day November 16

    American Censorship Day demo: redacted logoAmerican Censorship Day demoOn November 16, online activists plan to publicize their cause in the ongoing standoff over the media industry's crackdown on the illegal downloading of copyrighted content. As part of the campaign to block two major pieces of federal anti-piracy legislation, the Protect IP Act (PIPA) in the Senate and the Stop Online Piracy/E-Parasites Act (SOPA) in the House, a wide range of web sites will redact their own logos in facetious celebration of American Censorship Day.

    The bills now before Congress would seek to stem illegal downloads by allowing the government to block offending web sites. The lead groups behind the protest--including the Electronic Frontier Foundation, Demand Progress and other digital-activist outfits--contend that they represent a dangerous abrogation of free-speech rights.

    The bills enjoy support from many major media and content producers, including the National Cable & Telecommunications Association, the Motion Picture Association of America, the Directors Guild of

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  • Perry plummets in prediction markets after debate gaffe

    In some ways it was no big deal. Rick Perry couldn't remember the third of three government agencies he would shut down if elected.

    But this was live during CNBC's Republican debate Wednesday night, and Gov. Perry didn't handle his senior moment with grace. He finally admitted, "No, I can't [remember], oops." In a pre-YouTube era, or for a candidate not already typecast as a poor debater, the gaffe may have been overlooked.

    Not this time.

    Traders on prediction markets who earn their keep handicapping the election punished Perry instantly, sending his chances of winning the GOP nomination from 8.3 percent to 3.8 percent in less than two hours. (His chances have since modestly recovered to 4.4 percent as of 10:30 a.m. ET on Thursday.) Prediction markets are stock exchanges for political candidates, and they react just as brutally to bad news as their financial counterparts.

    Likelihood of Republican nomination for President (excluding Romney)

    Who benefited from Perry's drop? On this question the two major prediction markets, Intrade and Betfair,

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  • A Signal mission: Putting a number on uncertainty

    Uncertainty means being unsure, at least a little, about the outcome of some event in the future. Who will win the Super Bowl in 2012? Who will be our President in 2013? I don't know. No one knows. Anyone who says they know with conviction is either lying, delusional, or has inside knowledge that I believe — well, with 99.9% surety — that no one in the world has.

    Most people are happy to acknowledge that uncertainty exists: it's a part of life. We buy insurance precisely because we realize that the unexpected can happen. Many things are unpredictable, from Arab uprisings to Apple stock. But few go beyond admitting they are unsure to say exactly how uncertain they are, quantifying their doubt with a number, say 50.5% sure that Obama will prevail. What does it means to be "50.5% sure" of something? Part of our mission at The Signal is to report on predictions like this from all around the web, explain what they mean in straightforward terms, and encourage our readers, and leaders, to

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