An Interesting Election Perspective

[lawnrrd]

For those of you who haven't heard of the site, the Iowa Electronic Markets offer another perspective on the Presidential election, as well as other events, such as the Congressional races, and the Google IPO. The idea is that, using real money, people buy and sell outcomes of various future events like securities. If people have real money on the line, the theory goes, they will do the best they can to predict what's really going to happen, and various biases will average out. The whole thing is run by the business school at the University of Iowa.

I've been following the Presidential winner-take-all market. In that market, you can buy Kerry, Bush, or both. For each "share" of a candidate you buy, if that candidate wins the popular vote in November, you get a dollar. If the other candidate wins, you get nothing.

What's interesting is that people have been willing to pay more for Bush than for Kerry almost all the time since this market opened at the beginning of June. The candidates were very close in July and August, but Bush still led most of the time. Here's what I find very interesting: Kerry didn't get a post-convention bounce; Bush got a huge one. Kerry last traded at 42.5 cents; Bush, at 57.5.

For those of you who aren't familiar with this kind of thinking, let me put it another way: the market currently gives Bush a 57.5% chance of winning the popular vote. Kerry, conversely, has at 42.5% chance.

I can't really comment on the deeper meaning, other than to say that this is, and has been, very different from what the polls have said, even the most recent, post-RNC ones. The only other thing I can say is that Kerry seemed to be gaining ground up until the time I decided to vote for him.

Comments

[clayman.livejournal.com]

Hate to tell you this, but you're not in a battleground state so you're vote really doesn't matter considering you live in a bastian of liberals. Why not vote for Al Sharpton instead? Maybe a write-in vote for John McCain?

:-)

[lawnrrd]

Good God, I'd vote for Osama bin Laden before either one of those two.

[brewmasterboo.livejournal.com]

My 2c:
Perhaps this is more an indication of people who are willing to spend money on something like this. Democrats and liberals may just be too cheap/poor/sensible to buy into something like this. I know I'm planning to vote for Kerry and I wouldn't buy into it.

[rosemarymint.livejournal.com]

that was kind of what I was thinking. And traditionally, republicans have always given more money to their cause -- more than other parties. And not just because there is a large rich sect of the republican party.

[lawnrrd]

I don't think I follow you. None of this money goes to any party, candidate, or political organization. The business school holds it until the election, at which point the people who hold shares in the winning candidate are paid. Every dollar that gets paid in, of necessity, gets paid out that way.

How does this constitute "giv[ing] money to their cause"?

[lawnrrd]

Well, I can understand being too poor or too cheap, even though I'd point you to large sections both coasts for immense numbers of Democrats who are neither. But what's not sensible about it? What do you think that the people who do this are "buying into"?

[brewmasterboo.livejournal.com]

I have a weird idea about stuff like this. I view it as gambling which I find a waste of money. I've bought one lotto ticket in my life and never participated in an office pool of any kind. As a girl who was raised poor and frequently, in her short adult life thus far, lived poor, my mindset is still that things like this are frivolous and not a risk I'm willing to take. It's why I still haven't really started looking into stocks, despite the fact that I know I should. It's old "scrounge every penny for food!" mindset.

On top of that, I know more young democrats than young republicans and I know more older republicans than I know older democrats. Young people are more likely to be less wealthy, therefore less willing to spend money on something like this. I have no real numbers to back this stuff up, I'm just going from my own personal experience.