Blog Posts by David Rothschild, Yahoo! News

  • NCAA Predictions: Kentucky is favorite to win, East is wide open

    Like the rest of the nation, we're temporarily suspending our interest in politics to devote every ounce of our mental energy to the NCAA men's basketball tournament. Fortunately, the same online betting sites we use to predict presidential elections can give us a lot of information about March Madness.

    Kentucky is the top ranked NCAA basketball team in the country and the clear favorite to win the tournament at 26.7 percent odds. Those are tremendous odds, given that the team has to win six straight games against the best teams in the country (if you county an opening round game against 16-seed Western Kentucky).

    The presence of Kentucky makes the South region the most dangerous for other top ranked teams: No. 2 Duke, No. 3 Baylor, and No. 4 Indiana all have the lowest likelihood of winning the title compared with the other teams of similar rankings.

    The East is the most wide-open region due to the ineligibility of top ranked Syracuse's start center, Fab Melo. Second ranked Ohio State

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  • Santorum’s wins knock Gingrich out of the running in Louisiana

    Following last night's big wins in Alabama and Mississippi, Rick Santorum has delivered the knockout blow to Newt Gingrich that he has long desired. Gingrich may or may not actually drop out of the race in the next few days, but he is no longer a viable alternative to Santorum in the anyone-but-Romney vote.

    Our predictions in Illinois and Louisiana reflect the new two-person nature of the race for the Republican nomination. Over the last few hours, Gingrich, who had respectable odds in Louisiana going into Tuesday, has fallen out of the race. Santorum is now heavily favored to carry the state at 84.9 percent, according to the political prediction markets. Illinois has always been a two-person race between Santorum and Romney; Romney is favored at 72.7 percent.

    Likelihood of Victory in IL & LA Primaries

    Sources: Betfair and Intrade

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  • Gingrich leads narrowly in Alabama and Mississippi primaries

    After a Super Tuesday night that was more protracted than it was surprising, Tuesday contests in Alabama and Mississippi look like they'll be two of the more exciting primaries of the season. Our predictions, based on the political prediction markets, give a slight edge to Newt Gingrich in both states: 64.4 percent likely to win in Alabama and 55.7 percent likely to win in Mississippi.

     

    Gingrich's only two victories so far have been in neighboring Georgia and South Carolina; a double win tonight would put him firmly on the path to sweeping the five states traditionally considered the heart of the Deep South. Our predictions map has Gingrich with a razor-thin lead in Louisiana, the fifth state in this regiona lead that will surely widen if he does well tonight.

    It is Santorum's assertion that Gingrich is splitting the anti-Romney vote. While the former speaker is at a major disadvantage in delegates, wins tonight would make it unlikely that Santorum could force him out of the

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  • The imaginary connection between tax rates and GDP

    The richest Americans currently pay a 35 percent tax on income over a certain threshold. This is a divisive subject between the two major parties that is sure to come up in the general election. Both Mitt Romney and Rick Santorum propose plans that would lower the rate to 28 percent. Newt Gingrich's plan includes a flat tax of just 15 percent. Obama favors returning the pre-Bush tax cut rate of 39 percent.

    Proponents of lowering this rate argue that higher marginal tax rates retard productivity for the highest earners, since they are reluctant to work as hard if the bulk of their income is taxed at too high of rate. Lower the rate, the thinking goes, and the rich are incentivized to earn more, thus increasing the total tax revenue and putting more money into the economy.

    Democrats point to studies like that of the Congressional Budget Office, which found that cutting income tax by 10 percent would reduce revenues by $466 billion in five years and another $775 billion in the next five

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  • As go the prediction markets, so goes Ohio

    Ten states voted in caucuses and primaries on Super Tuesday, but you could be forgiven for thinking only Ohioans were holding a primary contest, given the news industry's relentless obsession with the state. Now that the dust has settled, let's have a look at how poll-based and market-based prediction engines fared in foreseeing the victor.

    Polls are a key ingredient in making political forecasts. They specialize in providing a snapshot of the current state of the election, and will be a critical part of the Signal's general election predictions beginning in September, when the Republican's finally have a nominee and the picture in November has clarified. But they are only one piece of the puzzle. A survey cannot completely account for variables like a candidate's cash on hand, organization and general momentum in the political narrative. A wealthy, organized candidate with a strong presence in a state can boost his numbers in the polls and ballot box by utilizing that advantage,

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  • Romney goes for the kill on Super Tuesday

    We have held all along that Mitt Romney will be the Republican Party's nominee for president. Since his double win last week in Arizona and Michigan, his odds in the prediction markets have jumped above 80 percent. That's likely to go up again after Super Tuesday, since the most likely scenario has Romney winning 7 of the 10 states, Rick Santorum taking 2, and Newt Gingrich winning his home state of Georgia.

    The question is whether voters in future primaries decide the race is effectively over after Tuesday and flock to Romney, or whether Santorum lives to fight another day in the polls. A big-enough night for Santorum could prolong his eventual defeat, since polls tend to be more short-sighted than markets. Here are the odds for tomorrow's individual elections:

    We can predict with near certainty that Romney will win in Virginia (where only he and Ron Paul are on the ballot), his home turf of Massachusetts, neighboring Vermont, and Idaho. Gingrich likewise has odds of about 95 percent

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  • Romney has no chance in Massachusetts in November, contrary to what our predictions say

    Two weeks ago, we unveiled our model of presidential elections based on data from the past ten election cycles, which currently predicts that President Obama has a fragile advantage over his eventual opponent. We currently project that the president will win 303 electoral votes in November. But if the economic or job approval numbers slide backward even a few ticks, he loses the election by a hair.

    Today we'd like to examine one rather glaring error in the model and explain why we're not going to fix it: Massachusetts stands at 74.4 percent likely to go to Obama, while all external signs dictate that it is a much safer bet for the Democrats. This is because we currently assume Mitt Romney will win the nomination, as the prediction markets suggest.

    There is overwhelming empirical evidence that presidential candidates get abnormal returns in their home state. In 1984, for example, Walter Mondale still won Minnesota even though the other 49 states all went to Ronald Reagan. (Mondale also held down Washington, D.C.) So Yahoo! Labs' Patrick Hummel and I tested this theory with data from the last ten election cycles. We determined the size of that abnormal return, calibrated on those past races. This boost shifts Massachusetts from a Democratic lock to a Democratic-leaning state. It currently flips for Romney if Obama's approval rating falls to 41 percent, well before similar states.

    Read More »from Romney has no chance in Massachusetts in November, contrary to what our predictions say
  • What to expect if Romney (or Santorum) wins Michigan

    Update, 9:49 p.m. ET: Mitt Romney is now very likely to carry the state of Michigan. With 50% of the state reporting he is up by almost 20,000 votes to Rick Santorum and we project him as 96.9 percent likely to hold that lead to victory.

    The markets reacted quickly tonight allowing The Signal to be among the first news sites to signal Romney's likely victory (follow us on Twitter for the fastest reaction pieces during breaking news events):

    Likelihood of Winning Michigan Primary

    The Signal has favored Romney as the likely winner throughout the time between his big losses on February 7 and when the polls closed tonight the likely victory marks an important milestone on his road to his likely Republican nomination. As projected, he has increased his likelihood of gaining the Republican nomination by nearly 6 percentage points since the polls closed from 72.8 percent to 78.5 percent.

    Ahead of tonight's primary results, we see two possible paths the prediction markets could take depending on what happens in Michigan.

    In

    Read More »from What to expect if Romney (or Santorum) wins Michigan
  • As Republican nomination extends into March, candidates face weakening odds in general election

    The longer-than-expected Republican primary has given many more voters a chance to meet the candidates and cast ballots in meaningful elections, but it has caused some in the party to worry that it is weakening the eventual winner in his confrontation with President Obama. Mitt Romney is still the heavy favorite to win the nomination, with 75.2 percent odds to Rick Santorum's 9.8 percent, but the data suggests he could be looking at a Pyrrhic victory. The president's odds of re-election jumped to above 60 percent in the days after Santorum's big wins on February 7, according to prediction markets. Since then they have steadily crept up; by contrast, Obama spent the fall and early winter hovering around 50 percent.

    We can compute the Republican challengers' likelihood of victory against Obama, should they win the Republican primary, by dividing their likelihood of becoming president by their likelihood of winning the nomination. Because this is a "conditional probability" -- you can

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  • Markets heavily favor The Artist for top Oscar laurels

    If you need your fix of market data this morning and can't take another word out of the mouth of a man running for president, we've got Oscar predictions for you here at The Signal. Using the same methods to predict entertainment awards as we have done to predict political elections and sports games, we are extremely confident that The Artist will take home the Best Picture laurels; we give it an 89.7 percent likelihood of victory.

    Unlike the state and federal elections, we have no polling to utilize for our predictions. Recent research has determined what the Academy electorate looks like, but it would be very costly to create a randomized selection of these 5,783 potential voters; due to their rarefied stature, they are not the easiest to reach in random polling.

    But as we've somewhat gleefully pointed out, polls undulate with the wind while markets react with a cooler head. Thus, we base our likelihood off the prediction markets Betfair and Intrade. On these websites, users can buy

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