Monday, October 29, 2012

Intrade and Nate Silver significantly upgrade Obama’s odds for victory

By: Ryan Witt

As Election Day draws near millions of Americans are looking up the latest polls to see whether Mitt Romney or President Obama will win in November. In addition to the polls, two other projections have gained significant notoriety over the last year. One is a market called Intrade, and the other is projective model developed by statistician Nate Silver of The New York Times. Both of those predictive measurements have significantly upgraded President Obama’s odds for victory over the last 72 hours, likely in response to Obama’s improving poll numbers.
For those unfamiliar with Intrade, it is a trading market in which people to make predictions by buying stock in a particular event. For instance, someone can buy “stock” in the prediction that President Obama will win re-election vote count on November 6. Currently that “stock” for President Obama winning is selling a $6.29 a share. If the trader is right and the event happens they can sell each shares for $10. If the trader is wrong, and the event does not happen, their shares go down to $0. Shares can also be sold before the event happens for a profit or loss.
With the “Obama re-election stock” currently selling at $6.29, traders are essentially betting that Obama has a 62.9% chance of winning. That number is a significant upgrade from Obama from Wednesday morning, when Obama was trading at just $5.60. What this essentially means is that people who have actual money riding on the outcome increased Obama’s odds for victory by 10 percent.
The second projection is much more complicated. Nate Silver has developed fame for a website called which incorporates all the polling data, and more, in order to project elections. Silver’s model is much more complex than a simple average of the polls. Silver takes into account the demographics of each state, the direction of the economy, and he also weighs each pollster differently based on their past performance.
According to Silver’s November 6 forecast, President Obama currently has a 73.1% chance of winning the election. Over the last 72 hours Silver has increased Obama’s odds by over 5%. Two weeks ago, on October 12, Silver had President Obama’s odds down all the way to 61.1%.
So while many in the media are continuing with the narrative that Mitt Romney has the momentum, Obama is trending up with the people who are putting their wallets where the mouth is, and with the statistician who has made a name for himself in projecting elections.

No comments: