I have been following the Republican primary on Intrade, the betting market site. In the last few days, the probability Mitt Romney winning the nomination has gone down by about 10%, from about 80% to about 70%. The probability of Newt Gingrich winning the nomination has gone from virtually 0 to about 15% At the same time, the probability of President Obama being reelected has increased, from about 51% to about 56%. This is telling us something about the market’s perception of the relative strength of Romney versus Gingrich as a candidate.
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PAUL H. RUBIN is Samuel Candler Dobbs Professor of Economics at Emory University in Atlanta and formerly editor in chief of Managerial and Decision Economics. He blogs at Truth on the Market. He was President of the Southern Economic Association in 2013. He is a Fellow of the Public Choice Society and is associated with the Technology Policy Institute, the American Enterprise Institute, and the Independent Institute. Dr. Rubin has been a Senior Economist at President Reagan's Council of Economic Advisers, Chief Economist at the U.S. Consumer Product Safety Commission, Director of Advertising Economics at the Federal Trade Commission, and vice-president of Glassman-Oliver Economic Consultants, Inc., a litigation consulting firm in Washington. He has taught economics at the University of Georgia, City University of New York, VPI, and George Washington University Law School. Dr. Rubin has written or edited eleven books, and published over two hundred and fifty articles and chapters on economics, law, regulation, and evolution in journals including the American Economic Review, Journal of Political Economy, Quarterly Journal of Economics, Journal of Legal Studies, and the Journal of Law and Economics, and he frequently contributes to the Wall Street Journal and other leading newspapers. His work has been cited in the professional literature over 8000 times. Books include Managing Business Transactions, Free Press, 1990, Tort Reform by Contract, AEI, 1993, Privacy and the Commercial Use of Personal Information, Kluwer, 2001, (with Thomas Lenard), Darwinian Politics: The Evolutionary Origin of Freedom, Rutgers University Press, 2002, and Economics, Law and Individual Rights, Routledge, 2008 (edited, with Hugo Mialon). He has consulted widely on litigation related matters and has been an adviser to the Congressional Budget Office on tort reform. He has addressed numerous business, professional, policy, government and academic audiences. Dr. Rubin received his B.A. from the University of Cincinnati in 1963 and his Ph.D. from Purdue University in 1970.
In general, Intrade has been much more accurate than the polls.
I was thinking more of Jimmy the Greek’s successors in Las Vegas and the London bookmakers, who in the past have had uncanny success in getting U.S. elections right (but probably not this long before the event). Are they players the same? What is the track record of Intrade? This is an honest question: Do you know the answer?
“This is telling us something about the market’s perception of the relative strength of Romney versus Gingrich as a candidate.”
Yes. It’s telling us that the market has the same perceptions as the Republican establishment. Come to think of it, the market probably has very much the same composition as the Republican establishment. Insights from interviewing the same group twice don’t add much to one’s store of knowledge. Let’s go to a group that has a different composition, and a good track record for picking winners: what are the gamblers saying about the nomination and the general election? That would add to our store of prognostications!
Maybe I was not clear: Intrade is the gambling market.