August 2012

Two stories will play out today as the floors are swept and the balloons popped at the Tampa Bay Times Forum: That Republican nominee Mitt Romney will receive a bump in the polls after accepting the nomination, and to pay no attention to this bump. These stories evidently do not cancel one another out.

The prediction markets we follow are generally uninterested in temporary inflations like these. (The same will probably be true for President Obama this time next week.) In fact, the spread in the gambling markets moved slightly in Obama's favor from before to after the Republican Convention. This does not mean the convention was unsuccessful. Sure, there were some strange moments, but most of the events went off without a hitch. It simply means it was not a homerun. Romney is challenging an incumbent president, so anything less than a picture-perfect convention is going to give the market a sense that he's running out of time to make his case for a change of leadership.

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If you have limited time to devote to following the presidential election this fall, I suggest you follow the data on just three states: Florida, Virginia, and Ohio. Mitt Romney's only likely path to victory over Barack Obama is to win those three states. Conversely, if Obama can carry just one of those states, he will likely win the election.

All of the predictions in this column update in real-time on PredictWise. I create the predictions with a combination of three types of data: polls of voter intention (via the HuffPost Pollster API), prediction markets, and fundamental data. For the unfamiliar, prediction markets, such as Betfair and Intrade, are markets where the user buy and sell contracts on outcome of the upcoming election.

Obama is extremely likely to carry 191 electoral votes from 15 states and DC. Likewise, Romney is extremely likely to carry 167 electoral votes from 20 states. In these states, the other candidate has a negligible likelihood of flipping the state.

Obama has 46 electoral votes from three additional states where Romney has a non-negligible likelihood of stealing a state (Obama's likelihood of victory): MN (89.5 percent), PA (89.2 percent), and MI (86.6 percent). Romney has 39 electoral votes from four additional states where Obama has a non-negligible likelihood of stealing a state (Romney's likelihood of victory): AZ (94.4 percent), MO (90.3 percent), ND (86.9 percent), and NC (85.2 percent).

I actually expect, on average, one of these states to flip. Electoral College elections are not independent outcomes; it is highly likely that any candidate that picks up a state where he had a 5 to 20 percent likelihood of victory has also won a lot of states where he had a 20 to 50 percent likelihood of victory. In order to capture a long-shot state, a candidate needs something more than an idiosyncratic shock to that state, but also a national trend that carries a few other states with it as well. Thus, it is extremely unlikely that the long-shot state would swing the election; rather, it will pad a solid victory.

Before considering the only eight swing states, Obama has 237 electoral votes to Romney's 206 electoral votes; the winner needs 270 electoral votes or 33 more for Obama and 64 more for Romney.

Florida (29), Virginia (13), and Ohio (18) account for 60 or the 95 remaining electoral votes and constitute Romney's only viable path towards victory. Victory in all three would require Romney to just pick of one of the other five remaining states (Obama's likelihood of victory): Iowa (52.1 percent), Colorado (60.8 percent), Wisconsin (67.5 percent), New Hampshire (71.2 percent), and Nevada (73.7 percent).

If Obama wins Florida (41.1 percent), there is no almost likelihood that Romney sweeps the rest of the states to take the presidency. This is the only swing state that leans Romney. If Obama wins just Virginia (52.4 percent) or Ohio (58.9 percent), it is possible for Romney to win, but highly unlikely, because he would have to virtually sweep the remaining swing states.

Where does this leave the overall election for me as we head into the Republican National Convention -- I have Obama with a 58.9 percent likelihood of reelection, or the exact same likelihood as his chances in the pivotal swing state of Ohio.

This article is syndicated on the Huffington Post.

Note on 8/29 at 3:40 PM: This article was written and published prior to Christie's speech.
To quote Ezra Klein: "This is a great speech. But it's a great speech for Chris Christie, not for Mitt Romney."


Let's assume that, like virtually every politician in America, Christie wouldn't mind being the president. He made a mistake not running this year, in which Republicans reluctantly nominated a former blue-state governor with low favorability to go up against a vulnerable sitting president. But economics counsels us not to make decisions based on sunk costs or regrets. Let's game this out.

If Romney wins in November, the soonest Christie could run is 2020, barring a historically disastrous first term for the former Massachusetts governor. First, he will have to decide whether or not to run for re-election in New Jersey in 2013. Many suspect that popular Newark Mayor Cory Booker will be the Democratic candidate, meaning Christie would face a bruising election. Losing would damage him nationally, and winning would require that he solidify his blue-state bonafides. This will make running for national office more difficult, even seven years later—just ask Romney.

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Our full model, which does factor in polls and markets in addtion to fundamental data, still has Obama winning the election with 303 votes.

We searched for an explanation for difference between our full model and our pure fundamental model, by looking for data points that are uniquely different this year than in the historical elections. There is one glaringly obvious factor: the favorability difference between Obama and Romney.

Favorability is shockingly bad for Romney. Pollsters routinely ask questions like, "Do you have a favorable or unfavorable impression of ..." for both Obama and Romney. Currently, the Pollster average has Obama with 48 percent favorability and 45 percent unfavorability, while Romney is lingering with 41 percent favorability and 47 percent unfavorability. Romney's consistent negative favorability to unfavorability split is unprecedented in American politics.


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Missouri Republican Rep. Todd Akin woke up Sunday morning with a 65 percent chance of unseating incumbent Democratic Sen. Claire McCaskill in the upcoming Senate race. By the end of the day, after facing a torrent of criticism over his claim that women rarely get pregnant as a result of "legitimate rape," the tables had turned: Our real-time predictions now give McCaskill a 60 percent chance of retaining her seat.

It is not too soon to speculate that this could be the 2012 variety of George Allen's 2006 "Macaca moment," which was instrumental in the incumbent senator's defeat. That narrow loss, as well as several others, cost the Republicans control of the Senate by one seat that year.

The Senate hangs in an equally fine balance this year. Before Akin's odds went south, the Republicans were on track to control 50 seats to the Democrats' 49, plus one independent. While that figure will almost certainly wobble between now and November, it is eminently possible that one seat will make the difference.

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Missouri Republican senate candidate Todd Akin started the day with a 65 percent likelihood of unseating the incumbent Democratic Senator Claire McCaskill. Earlier today footage of Mr. Akin's appearance on The Jako Report became public. In response to a question about legalized abortion for rape victims, Mr. Akins stated that, "From what I understand from doctors, that is really rare. If it is a legitimate rape, the female body has a ways to try to shut that whole thing down."

Anticipating the effect of these comments on the senate race between now and Election Day, PredictWise's real-time predictions have moved to 70 percent likelihood for Senator McCaskill. We expect this prediction, which includes polls, prediction markets, and fundamental data, to move even further in the next few days when the first polls are conducted that include these comments and they likely catch up with the prediction markets.


Mitt Romney has one clear route to victory on Nov. 6: In addition to winning all the states we know he will win, he has to capture Florida, Virginia, Ohio and at least one of five other swing states.

It's very possible Romney will win more than that. Our model of presidential elections, for example, has him with a 17.2 percent chance of winning Pennsylvania. Were he to manage that, however, it would almost certainly be part of a national landslide in his favor that includes most of the swing states. While I'm sure the Romney campaign would be delighted to win Pennsylvania, if it manages that it will be because Romney won far more than the 270 electoral votes he needed.

Click Here for the Full Text on Yahoo!'s The Signal

As political nail-biters go, the most interesting battle in the 2012 election does not involve anyone named Obama or Romney. While the general election is going to be decided in six or seven swing states that have a reasonable likelihood of going for either presidential candidate, control of the Senate rests in a much more complex tangle of eight or nine states. Right now, our model of polls, prediction markets and historical data suggests that Democrats have a 48.7 percent likelihood of retaining control of the upper body.

The Democratic Party currently has 53 senators in its caucus to the Republican Party's 47 senators. But the way the cards fell with the 33 seats up for re-election this year was not kind to the incumbent party. Democrats are defending 23 seats while the Republicans are defending only 10 seats in this year's election. Stated another way, the Democrats have just 30 seats confirmed for the next session to the Republicans' 37 seats among the 67 total that aren't up for re-election for two or four more years.

Since the vice president casts a tie-breaking vote in the Senate, the Democrats must win 20 seats and the presidency or at least 21 seats to retain the Senate. The Republicans must win 13 seats and the presidency or at least 14 seats to take over the Senate.

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When the markets were leaning in the Pawlenty/Portman direction, they gave Romney a 70.7 percent chance of winning the state of Florida. With Ryan officially on the ticket, Romney is clinging to a 56.3 percent likelihood of taking the state. We expect polls to follow this path in the next few days.

Ryan's budget proposals will be at the center of the presidential campaign in Florida. For better or worse, his policies, if enacted, would probably cost the state's older residents. Ryan's budget calls for cuts to Medicare in the form of reduced services and increased premiums. He has also pushed for privatization of Social Security. Both of these measures would offset planned tax cuts that would drop the top income tax rate from 35 to 25 percent.

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With anywhere from days to weeks remaining in the long and tortured period of speculation over Mitt Romney's running mate, the Signal is increasingly convinced that either Ohio Sen. Rob Portman or former Minnesota Gov. Tim Pawlenty will get the nod. The prediction markets currently give them a 35 percent and 16 percent chance of victory, respectively. In other words, there's better than a 1-2 chance that Romney will opt for the safest choices available.

You could be forgiven for needing a refresher on which of these two politicians is which. Portman and Pawlenty are both white males in their fifties with records as reliable conservatives, not firebrands. Either would provide Romney cover from the right while providing a sense of prudent sensibility to the rest of the country. These men both provide a moderate benefit, credibility with the right, with little potential cost.

Click Here for the Full Text on Yahoo!'s The Signal