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Catfish and Cod
Saturday, May 22, 2004
 
Checking up on the commercial Nostradamus.
(Link path: The Economist, TradeSports)

Remember that disturbance last year about a DARPA project to predict the likelihood of future events through online trading? I wrote about it last year. (Look for "Public idea futures: I must dissent!"; permalinks seem to be inoperative that far back in the archives.)

Well, Tradesports has taken up the job (as I said private companies would, and legally could). The idea is now respectable enough that the Economist, that London-based pulpit of the moneyed cognoscenti, refers to their trading levels in their analysis of the election. And among their offered contracts are state-by-state electoral college victories. How well do they compare to the Election Projection referred to below?

Well, the overall scores for Bush have been dropping rapidly since the start of the year from their Saddam-capture high. Right now, TradeSports' PRESIDENT.GWBUSH2004 contract is selling at 55.2 cents, indicating a 55.2% chance of re-election.

Now how about the state-by-state results? They show a slightly better story for Bush than the poll numbers do. (That may be because more Republicans play these sort of free-market games than Democrats, or it may be due to a greater lag in the response of the trading system compared to polls, or both.) Right now, the numbers (tallied through the National Archives' electoral college calculator) show a 283-255 Bush lead.

But that lead is razor thin. Ohio and Pennsylvania are trading at, respectively, 51 and 50 cents. If they drop just a little, 21 electoral votes are reassigned to Kerry, giving him a 275-263 lead. While Bush could make this up with gains elsewhere, no other states are as close to tipping (according to TradeSports) than these two.

Conclusion: Bush really is in trouble. He has to show compelling good news or avoid any more bad news whatsoever, or he loses.

P.S.: The full data used to make the calculations for this post are in an Excel file. Email me if you want the full data.