The Right Coast

Editor: Thomas A. Smith
University of San Diego
School of Law

Thursday, July 19, 2012

Mitt didn't get himself elected President. Somebody else did that for him
Tom Smith

Mitt backers are getting euphoric, probably too euphoric. But I can't resist the irony that if it turns out O's super-gaffe ("you didn't build that") is a turning point in the campaign, O will indeed be able to take credit for his opponent's victory. He'll be able to say -- he didn't do that; I did it for him. Probably not what he had in mind, but still a nice irony. 

It will also be interesting to see if the, uh, curious strategy of the WH of just denial, even in an age of digital tape, the internet, transcripts, etc. etc., will work.  Can the MSM get so much on message, repeat often enough "no one could possibly sincerely think that the President meant that!" that people will come to believe it, a la repeat a lie often enough? (Assuming of course there is such a thing as a lie; I take no position.) It actually worked pretty well with the open mic incident with Russian tyrant-lacky Medvedev -- oh, ha, ha, who could actually think O was telling a foreign leader he was going to say one thing to the American people but not to worry, he was just BS'ing them, and would be quite flexible after he got himself reelected. No outrage, just LOLs.  That Obama is such a caution! Cue the sitcom music and laugh track. Unbelievable.

So how this plays out is not a foregone conclusion. If I were an O operative, I would want there to be a debate about what the president really meant, let that reach some sort of crescendo, and then he can come forth and say, more in sorrow than anger, that his has been misunderstood (meaning deliberately) by some (his evil enemies) and of course he meant [insert innocuous and barely plausible to the credulous explanation here -- I prefer the "those darn roads and bridges; where would we be without them?" variable, but I defer to the experts]. Some chunk of independent voters may even buy it. A little emphasized fact is that many independent voters are deeply ignorant when it comes to politics and not the sharpest pencils in the pencil holding thing. OTOH a lot of them are small business sorts and even a dog knows the difference between being tripped over and kicked.

And this:

It’s as if President Obama climbed into a tank, put on his helmet, talked about how his foray into Cambodia was seared in his memory, looked at his watch, misspelled “potato” and pardoned Richard Nixon all in the same day.

And that's what makes it so special. Do you also get the sense that somewhere up on a mountain some Greeks gods are ROFLing? Speaking of those who engage in illicit sex, as Greek gods so often did, it would be interesting to hear what Bill Clinton is saying about this. Probably less printable words have never been spoken. Paul Mirengoff is probably also correct that if this gaff does not turn out to be a defining moment, that will itself be a defining moment, in a bad way. Sort of like the elites being able to redefine American standards from What?! to Whatever in the matter of Clinton's formerly unbelievable but eventually entirely understandable activities in the White House with certain young person(s), which was personal.

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Much too euphoric. The bookies have always given Obama the edge and now his odds are rebounding. Look at Intrade: Obama's never been below 50%. That's how the contract on Bush's reelection behaved in 2004. I hope I'm wrong but as things are now it looks like Obama will be reelected.

Posted by: Jonathan | Jul 19, 2012 6:30:59 PM

You could be right but I don't have a lot of faith in intrade. Do you? Seems like a pretty thin market with very little movement even on news. I would trust it more if it showed a little volatility. I also worry about manipulation on such a small market.

Posted by: Tom Smith | Jul 19, 2012 8:08:27 PM

On Intrade, Bush was consistently beating Kerry in 2004 and Obama was consistently beating McCain in 2008. Same for the Iowa markets. There is a useful exhange on this between David Leonhardt of the NY Times and Justin Wolfers, an expert on prediction markets, at
There is also a good piece on Science on prediction markets.
And of course, there is the obvious question. If you think Intrade and the Iowa markets are wrong, then you should be buying Romney heavily, which would make you a lot of money. Are you?

Posted by: William Sjostrom | Jul 19, 2012 10:46:02 PM

The bookies have a good record on elections. At the least, the fact that they contradict the conservative media/blog consensus should give us pause. It's like when the price of a stock or commodity is creeping up despite a drumbeat of bad news. That tends to mean the market knows something that the consensus doesn't. For elections, bookmakers' odds are the closest thing to market prices.

Thin markets are usually adequate for price discovery. Also, it's not only Intrade. There are many bookies and their odds generally track each other. Manipulation is conceivable, especially in a small venue such as the Iowa Markets, but would be very difficult to pull off across the universe of bookmakers, most (all?) of whom are online and probably well arbed against each other.

Posted by: Jonathan | Jul 20, 2012 7:36:56 AM

Intrade has Ron Paul at 1 percent, which has to be nuts. His odds must be 1/1000 or worse. Maybe some buyers are holding for emotional reasons.

I generally agree that prediction markets should be better than mere pundits, who are much more emotionally invested than speculators. My question is more how accurate are they objectively (I realize that's a problematic standard in probability). I guess I also concede my claim probably boils down to the trivial "prediction markets could be better."

Intrade got the ACA case wrong, even though there was inside information leaking out that Roberts had gone wobbly. (I only found this out afterwards but some SCOTUS geeks apparently had heard this already.)

I don't bet because I have learned the hard way that I'm not smarter than markets, not smarter than NASDAQ anyway.
Anyway, I only think intrade is off by maybe 5-7 points, not enough of an edge for me.

If intrade "knows" something the conservative consensus does not, I would like to know what. Maybe it is effectively able to interpret noisy state poll numbers?

Years ago a did a little Condorcet jury experiment on my corporate law class and found that the majority was the smartest kid in the class by far, so to speak, so I'm a believer in the wisdom of crowds. But markets have to have information to work on and I'm just unsure how informed intrade speculators are.

What would be useful would be an average of all the different lines available on elections like the RCP average of polls. That would increase my confidence.

Posted by: Tom Smith | Jul 20, 2012 10:08:07 AM

Here's a helpful site:

The various bookmakers have Ron Paul at 50 or 100 to 1, so Intrade is in the ballpark. The bookies aren't very far from each other on Obama's and Romney's odds.

I acknowledge that Intrade predicts some things poorly. The ACA decision and the last Papal election are good examples. Decisions based on nonpublic information are very difficult to predict. But Intrade has been good on national elections. Maybe it's able to ignore partisan groupthink and knows which polls to pay attention to. I can't cite any offhand but there has been research. IIRC someone published a study comparing pundit and bookie predictions in recent British elections and found that the bookies did better.

Posted by: Jonathan | Jul 20, 2012 2:57:54 PM

Intrade was wrong about the Democratic primary last time. I was following it in 2008, and Clinton was favored over Obama until Super Tuesday.

Also, Romney was always going to be the nominee. I mean Herman Cain, Santorum, Gingrich. Seriously?

That being said, Obama has been ahead a point or two pretty consistently for a while now. The polls are actually pretty good usually. It's not over by a longshot but Romney has to win Floridia, Virginia, and Ohio while Obama needs to win exactly one of those states.

Posted by: molly | Jul 21, 2012 4:12:50 PM

"Until Super Tuesday."

Odds change with events. The fact that they change doesn't invalidate Intrade or any other prognosticator. The question is which of the available tools predicts best. My sense is that bookmakers' odds change in the same way that options prices do: they're not very accurate when a lot of time remains before the election, but they tend to converge on the correct result as the time remaining decreases. Obama at around 60 with three months to go makes me uneasy.

Also, I don't think Romney was inevitable. He may seem inevitable in hindsight but things might have been much different if another governor had run, if Perry had done better or if any of a number of possible events had happened. It's very difficult for individuals to estimate odds, which is one reason why market-driven odds estimators seem to do better.

Posted by: Jonathan | Jul 22, 2012 10:41:15 AM