Blog Posts by David Rothschild, Yahoo! News

  • Eighteen minutes in, markets abandon Santorum

    Just 18 minutes after voting began in Iowa's 99 counties at 8 PM ET, participants in the prediction markets began dumping Rick Santorum shares in droves. The vast majority of them threw in their lot with Ron Paul instead as the preferred Not-Romney candidate. Paul's market share has continued to climb since, enjoying a second surge shortly before 9:00 PM ET as both entrance polls and preliminary results trickled in, pushing him ahead of Romney into first place.

    Likelihood of Iowa Caucuses_Jan 3 at 9_12 PM

    Source: Betfair and Intrade. All data is ET.

    But don't count Santorum out yet. His support is spiking up and down like an EKG, and as those playing the markets glue themselves to the broadcasts just like the rest of us, they may heed the present three-way dead heat and give the former Pennsylvania senator another look. Stay tuned!

    Follow along on PredictWise for the real-time likelihood of the presidential election, the Republican nomination, and the specific primary contests.

    David Rothschild is an economist at Yahoo!

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  • Romney regains commanding lead in Iowa

    A few hours before the Iowa caucuses begin, Mitt Romney is just over 50 percent likely to win this first-in-the-nation primary contest, according to data from the prediction markets Betfair and Intrade. This is a strong recovery for the candidate, who was trailing both Newt Gingrich and Ron Paul for much of December. And it is only one of four major changes that have taken place in the prediction markets for Iowa in the last few days.

    Since last Thursday, Paul has fallen from a high of over 50 percent likelihood of victory to just about 25 percent. Rick Santorum has pulled away from the trailing pack of candidates to become a serious contender. And most interestingly, the markets that once gave Gingrich a 60 percent chance of winning have completely written him off, along with any other candidate, contrary to the polls that still have him at about 14 percent.

    Likelihood of Iowa Caucuses_Jan 3

    Sources: Betfair and Intrade

    Nationally, however, there is little confidence right now in anyone other than Romney. His 

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  • What do Mitt Romney and the Green Bay Packers have in common? Good odds

    This week the real action begins in two beloved American sports: politics and football. And analyzing the football playoffs can tell us a lot about how we predict elections. Using prediction market data from Betfair and Intrade, the Green Bay Packers have a 32 percent chance of winning the Super Bowl. The next best likelihoods go to the New England Patriots at 18.5 percent and the New Orleans Saints at 15.3 percent. The Packers and the Patriots both have a first-round bye in the playoffs, so they need to win three rounds of contests to capture the championship; the Saints are in the wild-card round, so they need to win four rounds.

    We can think of the presidential election as a two-round playoff for Republicans, with the added twist that all the teams play one another at the same time in the first round, with a play clock that ticks down over months instead of minutes. (President Obama gets a bye in the first round, facing no significant challenge to the nomination). Utilizing the same

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  • What’s the likelihood that Democrats could control Washington in 2012?

    As of December 31, 2011 the likelihood of the Democrats retaining the Presidency is 53.7 percent, retaining the Senate is 20.7 percent, and taking the House is 32.7 percent. This is compiled from Betfair, Intrade, and Iowa Electronic Market prediction market data.

    The chart shows how these three main predictions have shifted during the course of the year. Obama had a small spike when Osama Bin Laden was captured, but otherwise he's been on a slow decline for most of the summer and early fall, with a slow resurgence in the late fall and early winter. The Senate has been relatively steady with small spikes corresponding to shifts in specific seats, including retirements and announcements of new candidates. The House has shown the most flux with a steep decline that mirrored the President's, but continued longer into the fall. Yet, it has taken a sharp turn towards the Democrats in recent weeks:

    Likelihood of Democratic Victory in President, Senate, and House_Dec 31

    Sources: Betfair, Intrade, and Iowa Electronic Market

    Obama has been polling well against

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  • Making big bets on Iowa: Gingrich and Perry, not Romney

    After months of speculation over how much effort Mitt Romney will put into winning in the Iowa caucus, the Huffington Post is declaring him "All in." Romney will spend Friday in New Hampshire before coming back to Iowa on Saturday and staying through the Tuesday caucuses. Previously, some observers assumed he would stay another day or two in the friendly company of New Hampshirites.

    It's extremely likely that Romney will win New Hampshire, regardless of where he spends his time over the next few days or how he performs in Iowa, so spending a little more time in Iowa isn't much of a risk for Romney. Consider the  comparison below of insurgent Newt Gingrich's likelihood of winning in Iowa (black) against Romney's likelihood in New Hampshire (red) and in Iowa (navy). At the height of Gingrich's surge around the beginning of December, when Romney's likelihood in Iowa was as low as 10 percent, Romney never dipped below a 70 percent chance of winning New Hampshire. He is currently resting

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  • Romney leads prediction markets even as poll numbers lag

    Mitt Romney had another good week. Prediction market data from Betfair and Intrade indicates that the presidential hopeful has a nearly 70 percent likelihood to win the Republican nomination. His closest competitor, Newt Gingrich, isn't really even close; he has a 9.5 percent chance of winning, while Ron Paul registers a 7.7 percent, and Jon Huntsman at 3.9 percent likelihood. These numbers have held relatively steady all week, but Romney is on a slight upward trend while the other candidates' chances are trending downward.

    The prediction markets are in sharp contrast to the polls, which have remained steady, with Gingrich still clinging to a small lead. Real Clear Politics' aggregated poll trend has Gingrich at 27.6 percentage points among Republican voters to Romney's 24.8 percentage points and Paul's 12.2 percentage points. The chart below shows the polls and prediction markets side by side:

    Polling and Likelihood of Republican Nomination for President Dec 27

    sources: Real Clear Politics (polls) Betfair and Intrade (prediction markets)

    Why the

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  • Another anyone-but-Romney collapse: Guess who’s the front-runner again?

    Mitt Romney again solidified his front-runner status this week as Newt Gingrich's anyone-but-Romney position collapsed. Prediction market data, including Betfair and Intrade, now give Romney a 65.6 percent likelihood of victory in the Republican primary, compared to Gingrich's 11.0 percent and Ron Paul's 9.2 percent.

    Likelihood of Republican Nomination for President_Dec21

    Gingrich's decline in Iowa is persistent and sharp, his possible routes to the Republican nomination increasingly limited. He has trailed Paul or Romney in each of the last 4 polls of Iowa voters (Rasmussen, ISU, PPP, Insider Advantage); in the last 2 polls, he trails both of them by a sizable margin. Contrast that with how things looked on December 12: prediction markets had Gingrich's likelihood of winning Iowa near 60 percent. After that date, he started moving slowly downward before the possibility of victory in Iowa fell precipitously when the polls began showing declining support for him.

    Gingrich now has an 8.0 percent likelihood of winning in Iowa and just 18.5

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  • Now that Iowa is a dead heat, Romney is national GOP frontrunner again

    Newt Gingrich's likelihood of winning the Republican nomination plummeted in the prediction markets from nearly 40 percent midday on Tuesday to about 20 percent midday on Thursday, holding at 19.6 percent as of this writing. Gingrich still has a large lead in Real Clear Politics' aggregated trend of national Republican polls with 33.2 percentage points to 22.7 percentage points for Mitt Romney and 10.0 percentage points for Ron Paul. Gingrich's abrupt drop in the prediction markets is all about concerns over his strength in Iowa.

    The Iowa Caucus has fallen back into a dead heat. A PPP poll, released on Tuesday, gives Gingrich a slim 1 percentage point lead over Ron Paul, and a Rasmussen poll released Thursday gives Romney a 1 percentage point lead over Gingrich. Both results fall within the margin of error.

    The chart shows, side by side, Gingrich's likelihood of winning (1) the Republican nomination, and (2) the Iowa Caucus. As you can see, his prospects nationally are intimately tied

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  • How Ron Paul could win nomination

    Ron Paul has a 7.5 percent likelihood of winning the Republican nomination, based on data from prediction markets. That puts him in 3rd place, behind Mitt Romney at 47.7 percent and Newt Gingrich at 33.7 percent, but ahead  of Jon Huntsman at 5.4 percent.

    Real Clear Politics has Paul at 9.3 percentage points in its latest aggregated poll trend for the Republican primary. Among active candidates, that puts him 3rd behind Gingrich at 33.3 percentage points and Romney at 22.0 percentage points. The prediction markets and polls paint a picture of the race for the Republican nomination that contrasts with many indicators talked about on the internet.

    Likelihood of Republican Nomination for President_Dec13

    Ron Paul is by far the most popular candidate in The Signal's comment section. In every article we post there are streams of comments on Ron Paul. First, thank you for commenting! We appreciate that you are reading the articles and taking the time to comment on them. Yet, the readership of The Signal is not a representative sample of the

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  • Romney is still out front in the prediction markets

    Mitt Romney remains the frontrunner for the Republican nomination in the prediction markets.

    The latest aggregated polling trend from Real Clear Politics has Newt Gingrich at 31.3 percentage points to Romney's 20.3 percentage points (a massive lead), but the prediction markets still give Romney nearly 50 percent likelihood of attaining the Republican nomination, precisely 48.3 percent, to Gingrich's 32.7 percent.

    The chart shows that Gingrich's upward trend, along with Romney's downward trend, has checked over the last few days. It actually has reversed a little bit:

    Likelihood of Republican Nomination for President_Dec6

    In order to explain why Romney is still favored to win the nomination, I am going to simplify this race and consider the main scenarios. The simplest way to imagine the nomination process is that there are five early primary contests, a nearly five-week lull, and then the main contests.

    The five early contests are Iowa, New Hampshire, South Carolina, Florida, and Nevada. Gingrich is currently favored in Iowa, South

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