The Golden Globes Are All About Argo, But Oscars Still Leaning Lincoln (Syndicated on the Huffington Post)
DavidMRothschild on January 14, 2013 @ 12:22PM
The Golden Globes are just the first of a series of anticipated events that occur between the nominations and Oscar night, which help shape our expectations for the Oscars. Our expectations are primarily founded on prediction markets, which respond quickly to new information; they update here in real-time during major events. The outcomes of the Golden Globes cemented our expectations in most categories, but the few surprises will not have as large an impact on the Oscars as you may expect.
Best Actor: This is one of several categories where the Golden Globes scatter the Oscar nominees into multiple categories. Three of the Oscar nominees, Daniel Day-Lewis (Lincoln), Denzel Washington (Flight), and Joaquin Phoenix (The Master), were nominated in the "drama" group, while two of the Oscar nominees, Bradley Cooper (Silver Linings Playbook) and Hugh Jackman (Les Miserables), were in the "comedy or musical" group. We had Daniel Day-Lewis as a 97 percent likely Oscar winner for his performance as Lincoln, and that essentially unmoved by his victory in the Golden Globes. Hugh Jackman's victory in his category cements him as a distant second.
Best Actress: In our first of two really competitive categories, Jennifer Lawrence (Silver Linings Playbook) came into the Golden Globes with a 67 percent chance of winning the Oscar over Jessica Chastain (Zero Dark Thirty). Unfortunately, these two actresses were in different categories at the Golden Globes, and both won their respective awards; thus, the Globes did little to settle or shift this category. Two Oscar nominees, Jessica Chastain and Naomi Watts (The Impossible), were in the "drama" group, while Jennifer Lawrence was alone in the "comedy or musical" group. Emmanuella Riva (Amour) and Quvenzhane Wallis (Beasts of the Southern Wild) were not nominated for Golden Globes.
Best Supporting Actor: Our tightest category offered our best chance at market movement with four of five actors overlapping between the Oscar and Golden Globe nominations. We had Tommy Lee Jones (Lincoln) and Phillip Seymour Hoffman (The Master) enter the Globes virtually tied, with Jones leading Hoffman slightly. Alan Arkin (Argo) and Christoph Waltz (Django Unchained) were nominated in both contests as well, with Waltz in fourth place in the Oscar race. In a surprise win, the Hollywood foreign press gave the Golden Globe to Waltz over Jones or Hoffman. This propels Waltz into a clear third place in our expectations, but he remains far behind Jones and Hoffman, whose likelihood of taking home the Oscar remains about even -- in the mid-40s.
Best Supporting Actress: This category was a great preview for the Oscars, with four of five nominees overlapping: Anne Hathaway (Les Miserables), Sally Field (Lincoln), Amy Adams (The Master), and Helen Hunt (The Sessions). On par with Day-Lewis, Hathaway is our other sure bet for the Oscar and her victory in the Golden Globes further sealed that position.
This brings us to battle between Argo and Lincoln. While Argo swept the Golden Globes in the key categories of director and picture, it will be impossible for Argo to repeat at the Oscars. Lincoln is still the favorite to sweep these categories at the Oscars.
Best Director: Only two of the five nominees for best director overlapped between the Oscars and the Golden Globes. One was Steven Spielberg (Lincoln), our overwhelming favorite to win the Oscar at 90 percent likelihood, and the other was Ang Lee (Life of Pi). The Golden Globe went to Argo's Ben Affleck, who did not get an Oscar nomination. If Affleck had an Oscar nomination, it would be an extremely tight fight now for best director at the Oscars, but without Affleck, we have Spielberg holding steady on top, with Lee still clinging to second.
Best Picture: This is the most interesting category to watching following the Golden Globes. Lincoln entered the Golden Globes as our overwhelming favorite. Lincoln shared the Globe's best picture for drama category with four other Oscar nominees for best picture: Argo, Django Unchained, Life of Pi, and Zero Dark Thirty. The Globe's best picture for comedy or musical had two more Oscar nominees: Les Miserables and Silver Linings Playbook. And Amour was in the foreign-language film category. Les Misérables' victory in its category and Amour's victory in its category did little to move them out of distant places. But, Argo's victory over Lincoln was the most meaningful for us, moving it from the pack to a clear second place; it gained about 10 percentage points in likelihood of victory at the Oscars with its win at the Golden Globe.
This column syndicates with the HuffingtonPost
DavidMRothschild on January 10, 2013 @ 11:10AM
The Academy of Motion Picture Arts and Sciences announced its nominees for 85th Academy Awards and the big story so far this awards season is Lincoln, with 12 nominations. In our initial likelihoods of victory for the big six categories, Lincoln is our most likely winner in three: best actor (Daniel Day-Lewis) at near certainty, best picture at 94 percent, and best director (Steven Spielberg) at 70 percent. For best supporting actor, Lincoln's Tommy Lee Jones at 46 percent is in a tight race with a The Master's Phillip Seymour Hoffman at 48 percent. Silver Linings Playbook's Jennifer Lawrence is the favorite for best actress at 56 percent and Les Miserables' Anne Hathaway is the favorite for best supporting actress at 95 percent. After best supporting actor, best actress is our next most competitive category with Zero Dark Thirty's Jessica Chastain just behind Jennifer Lawrence. Two other key movies to consider are Life of Pi with 11 nominations and Argo, which, while a long-shot, is our second most likely best picture behind Lincoln.
The likelihoods that I will describe in this column over the next six weeks, through the February 24th awards ceremony, utilize three key sources: prediction markets, fundamental data, and, eventually, user generated data. Today's predictions rely heavily on prediction markets, including Intrade, but will expand as the data becomes more available in the coming days. The full methodology is the same as I utilized in predicting elections, just adapted for the Oscars. Of course, one key difficulty relative to politics is that a much smaller, exclusive group of voters decide this election and we have no polling data, which proved so prescient in the 2012 general election. As with my political commentary, I will leave the pontificating to others; this column will focus solely on what the data is saying about the likely outcomes.
Prediction markets are markets where knowledgeable users can back up their convictions over upcoming events with either real money or other meaningful rewards. Contracts on the outcomes of events are worth either a dollar if outcome occurs or nothing if does not occur; thus, the price of the contract is a strong indicator of the probability of it occurring. If the price for a contract that could be worth a dollar crosses ninety cents, users are very confident the outcome will occur, but if the same contract trades for pennies, users are very confident it will not occur. Users trade on many types of information and the markets are an efficient way of aggregating this dispersed information among dispersed users. Many academic papers have confirmed the value of prediction markets in forecasting upcoming events, especially political election ranging from the late 19th and early 20th century elections through the 2008 election. Further, prediction markets did very well in predicting the 2012 primary and general election and, more relevantly, both the 2011 and 2012 Oscars.
Fundamental data for movies includes categories such as: budget, release date, genre, gross revenue, average gross revenue per screen, ratings, etc. This is similar to the models in politics that focus on: past election results, economic indicators, ideological indicators, and biographical information about the candidates. Fundamental models serve two purposes. First, they provide baseline predictions of upcoming events. Second, they provide insight into which variables we should follow. For example, should we follow weekly, average, or aggregate gross revenue? My work shows that there is particular predictive power into the how much revenue the movies grosses in week 5 versus week 4. Fundamental models did very well in predicting the 2012 general elections.
User generated data will launch later this month to include input from people like you. First, I want to give users the chance to add to the data by pushing my predictions up or down. If the crowd consensus is in a unified direction, I will consider that a valuable indicator. Second, I want to expand my reach into all of the different categories; in particular those categories where the traditional data sources are very thin.
We expect our predictions to change in the coming weeks as events unfold. First, there are awards shows to happen: Golden Globes, Screen Actors Guild, etc. Second, there is data to still compile as some of the top movies this year have only been in release for a few weeks. Third, there are rumors that have yet to circulate and last minute pushes that have yet to play out. Stay tuned!
This column syndicates with the HuffingtonPost
DavidMRothschild on November 27, 2012 @ 6:02PM
Just 20 days after the 2012 election, the United States Commodity Futures Trading Commission (CFTC) brought its hammer down on Intrade, the most recognized prediction market in the United States. This action was not entirely surprising and indeed its specter may have kept some traders away. Yet, despite this, and while Intrade is just one of many valuable sources in understanding upcoming events, Intrade's volume and reach was especially critical in understanding the real-time impact of major events. Whatever the CFTC's reasons, the crackdown represents a win for entrenched financial and gambling interests, and a loss not just for Intrade and its US-based traders, but for researchers (including three Nobel Laureates) who study the use of markets as forecasting tools.
The CFTC ruling will bar United States-based investors from utilizing Intrade moving forward. The ruling creates a non-negligible possibility that the prediction market could close, as the CTFC has previously noted that up to 40 percent of Intrade's users are located in the United States. At minimum, if it survives, the ruling will restrict the dispersed information that Intrade was able to collect from users within the United States.
The price-divide between Betfair and Intrade, in both 2008 and 2012, was sustained in part by traders' fear that something could happen to Intrade. Betfair is the largest prediction market in the world, but does not have access to United States users and does not cover as many United States-based political questions. In 2008 and 2012 it consistently traded more confidently for Obama than Intrade, which ultimately proved more accurate. In a paper presented to the National Bureau of Economic Research in October, David Pennock and I posit that the counterparty risk of investing and holding money in Intrade (i.e., the worry that Intrade would not be able to return investments due to either legal or monetary constraints) was a major reason that investors did not close this price misalignment.
Fundamental data and polls already supplement prediction markets in forecasts, while social media data is advancing. Our February 2012 prediction had 50 of 51 Electoral College races correct based on fundamental data only -- past election results, economic indicators, presidential approval, incumbency, and senatorial ideology. Our model adds prediction market and polling data slowly in the spring and early summer, until they finally dominate later in the cycle. And, Intrade is just one of a few prediction markets that we aggregate; popular media's fixation on Intrade's price versus aggregated prices made it more susceptible to possible manipulation. Aggregating not only improves prediction accuracy, it protects our models from the loss of any one particular market. The next frontier is investigating how social media data can further inform predictions.
Yet, prediction markets are a very effective way of gathering and aggregating dispersed information on upcoming events and Intrade has the largest volume and reach in major questions facing the United States. Prediction markets are especially crucial in providing granularity to our forecasts, allowing them to be incredibly accurate on a minute by minute basis and providing key understanding of the impact of major events. Poll-based forecasts are not very useful in the minute and days following major events, because they take days to adjust. And, polls cannot provide the granularity to isolate the impact of events such as a single debate or speech. Below is the impact of the three debates of 2012; the impact of the first debate was historically large.
Sources: Betfair, Intrade, IEM
Prediction markets are especially effective in questions with less centralized information; for example, early in an election cycle and at times of high information flow. We were able to provide accurate and calibrated real-time Senatorial forecasts months before any poll-based forecast started. While prominent poll-based forecasters made just a scattering of primary predictions, prediction market-based forecasts were incredibly accurate. Further, prediction markets have proved their worth in a host of other fields, including intelligence, where the government is currently running a multi-million dollar experiment.
Prediction markets are extremely transparent and relatively small; this is in sharp contrast to credit default swaps and other popular contracts types that are both opaque and massive. Intrade goes to great lengths to transparently define the contracts in their markets for hosts of potential pitfalls: candidate deaths, calling outcomes, etc. The investors in this market are fully aware of what they are trading and the risks associate with that. Since the contracts opened several years ago, Intrade matched about 8 million $10 contracts on either Obama or Romney to win the 2012 election. For comparison, there are about $25.5 trillion in open credit default swaps as of December 31, 2010; credit default swaps are just one of the many notoriously opaque contract types that caused so much misery during the Great Recession.
Research into forecasting political campaigns, effects of public policy, entertainment, sports, marketing, economic indicators, and financial indicators will continue, even if the government shuts down all prediction markets. But, the information has been of incredible value to researchers, with no evidence of a net downside to users. Which makes the CFTC's ruling unfortunate for research and users alike.
David Pennock, also of MSR-NYC, contributed to this article.
This article is syndicated on the Huffington Post.
DavidMRothschild on November 14, 2012 @ 9:36PM
There are two questions to ask when evaluating a political prediction, whether it's from Nate Silver, a pollster, an academic or your favorite Yahoo News predictions blog:
A) How useful was the prediction the day before the election?
B) How useful was the prediction the day after the election?
A great deal of attention is devoted to scoring the performance of various seers and prognosticators on Point A. We went 50 for 51 in that regard, getting every state correct except Florida—of course it was Florida—in our last prediction before voters went to the polls. (We might humbly point out that our original prediction, announced in February, was precisely the same as the one we made on Nov. 5. And, predictions in February are a lot more useful to the multi-billion dollar campaign industry than predictions in November.)
Evaluating Point B is trickier. Have forecasters like Silver, who relies primarily on aggregating polls, taught us anything about how elections work and what motivates voters?
While polls do offer some insight into how public opinion responds to high-profile events—though always at a delay of at least a day—they're powerless to reveal the high-level factors, such as the economy, that influence elections months and even years ahead of time. That's why The Signal prefers to start with models, like the one we debuted in February: It teaches us which factors correlate with election results and which do not.
DavidMRothschild on November 07, 2012 @ 2:22PM
The senate is almost wrapped up with just one more race left to play out.