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Is Intrade Really a Valuable Predictor?
American Catholic ^
| Thursday, October 11, 2012 A.D.
| Paul Zummo
Posted on 10/13/2012 12:53:43 AM PDT by GonzoII
Intrade is an online trading platform where participants actually place (legal) bets on the outcomes of certain events. For close to a decade political pundits have been using it as a reference to predict election outcomes. Indeed it seems to have a good record, correctly predicting the outcomes of the 2004 and 2008 presidential elections, and getting all but two states correct in 2008. Currently, Intrade gives Barack Obama a 62.4% chance to win re-election.
So is Intrade a valuable resource that can be relied upon to accurately predict election outcomes? Not in the least.
This Business Insider article sums up several of the problems with Intrade, and hits upon the point that has bugged me the most about it, namely that all it does is distill current conventional wisdom. Take, for example, that 62.4% number above. Sure that looks good for Obama, but over a week ago that number was well over 80%. In other words, as Obama’s poll numbers moved down so did confidence by Intrade investors. As Joe Weisenthal put in when discussing the Republican primary:
So why ignore InTrade? Well, basically, because all it does is distill conventional wisdom. Seriously, what good is it to know that on InTrade Mitt Romney is far ahead, and that Hermain Cain doesn’t have a chance? All you have to do is read any DC-based political pundit, and they’ll tell you the exact same thing.
And when the conventional wisdom changes, so does the market.
Rick Perry is down in the dumps on InTrade now, but back in August — when everyone was talking about how he was the frontrunner — he was the frontrunner on InTrade as well.
Weisenthal then tracks Perry’s chances on InTrade, and notes how they basically just mirror Perry’s poll numbers.
Even the 2004 and 2008 results aren’t that impressive in retrospect. When people woke up on election day 2008, did anybody really doubt that Barack Obama would win, other than people who clung to fleeting hopes of a miracle McCain victory? And in 2004, Bush’s chances were just over 50% – meaning that the market as a collective was leaning the same way as most polls which, with a few exceptions, generally gave Bush a slight edge. In fact, if you look at Intrade activity on election day itself, Bush’s chances plummeted as early exit poll leaks suggested a Kerry victory, and then rose again as actual election results came in and a Bush victory became more apparent. In other words, Intrade just reflected the polls. And while the state predictions seem impressive, again, how many states were truly up for grabs? Intrade was therefore no more useful a guide than any reasonably informed individual with access to polling data.
Some fans of Intrade like to point out that participants literally have to put their money where their mouth is. I don’t really see how this makes the platform any more valuable as an index. Bookies all over the country would be the ones fearing having their legs broken if money induced wiser gambling behavior – and Intrade is, in essence, simply a gambling platform.
Long story short, Intrade offers no more insight into how the election will play out than some cranky guy writing on a blog who can look at the Real Clear Politics average of polls (which has Romney up by 1.3 percent, incidentally). So then why do pundits insist on citing it, and why do people continue to think it has any meaningful predictive value?
TOPICS: News/Current Events; Politics/Elections
KEYWORDS: elections; intrade
"Intrade gives Barack Obama a 62.4% chance to win re-election."
LOL. Spare me!
posted on 10/13/2012 12:53:49 AM PDT
The small volume at Intrade is easily manipulated and I wouldn’t be surprised to find out that the Obama campaign is doing exactly that.
posted on 10/13/2012 12:56:56 AM PDT
("Winning isn't everything, it's the only thing." -- Vince Lombardi)
“Bookies all over the country would be the ones fearing having their legs broken if money induced wiser gambling behavior and Intrade is, in essence, simply a gambling platform.”
Only ones who don’t know how to figure the odds. Bookies get their vig no matter what.
posted on 10/13/2012 1:12:51 AM PDT
(I use the term Leftist not liberal, because a true liberal would not support government censorship.)
Intrade is strictly odds designed to even out the bets on both sides, same as any bookie. Ideally, you get exactly the same number of people betting for as betting against. Intrade adjustments are based on imbalance on one side or the other - - and reflects that more “bets” are going for Ubama than against Ubama.
I suspect that all the bogus polling and liberal newsroom bias is causing a lot of people to place their bets on Ubama.
Didn’t Intrade have Barry at 80% a few weeks back? Down to 62% is actually a really big move. I think they fell for all the biased polling and msm propaganda and are going to pay out big time in November! No other election has ever been like this— the indicators normally looked at (polling, msm chatter, etc) aren’t being applied correctly, IMHO. Intrade was/is predicting outcome based on inaccurate information.
Intrade w/ 0’ at 80 or 60.2 is just an opportunity for wealth transfer.
From ‘rat lovers to freedom-lovers.
The only impediment to this wealth transfer are the logistical hoops Intrade has in its registration process.
posted on 10/13/2012 1:32:08 AM PDT
("ask not what the candidate can do for you, ask what you can do for the candidate" (Breitbart, 2012))
To: HiTech RedNeck
Ping (I think it was you that explained Intrade on a previous thread)
posted on 10/13/2012 2:32:42 AM PDT
Intrade is no longer accurate for any purpose. Just go and see how accurate they were on the traitor roberts and the knife... called obamacare... that he slipped into our rib cages.
posted on 10/13/2012 4:02:22 AM PDT
(OUR GOVERNMENT AND PRESS ARE NO LONGER TRUSTWORTHY OR DESERVING OF RESPECT!)
Not to mention the monthly fees they extract from members whether or not any bets are placed.
posted on 10/13/2012 4:12:32 AM PDT
Agreed! It’s been a decent predictor, but with the soros left involved, it is way to easy to manipulate the numbers to discourage people.
posted on 10/13/2012 4:28:22 AM PDT
(It's time for a fundamental restoration, of our country's principles!)
Didnt Intrade have Barry at 80% a few weeks back? Down to 62% is actually a really big move.
Yes. As I write this, he's down to 59.9. The two debates registered.
posted on 10/13/2012 4:44:29 AM PDT
by Right Wing Assault
(Dick Obama is more inexperienced now than he was before he was elected.)
To: Right Wing Assault
and i think Intrade used to be more accurate.
but i read a FReeper saying that there were changes made,
i think in the past 2 years, that stopped people from using USA credit cards. That would probably skew things.
posted on 10/13/2012 5:06:08 AM PDT
(It is incumbent on every generation to pay its own debts as it goes. - Thomas Jefferson)
My recollection is that Intrade had odds of the Supremes invalidating the Obamacare individual mandate at 90 percent or higher.
posted on 10/13/2012 5:27:46 AM PDT
Wondering about another bias. Are there more liberal gamblers than there are conservative gamblers? My gut says yes.
posted on 10/13/2012 5:33:18 AM PDT
"Intrade gives Barack Obama a 62.4% chance to win re-election." LOL. Spare me!
They are like polsters - real data won't be reflected until 2 days before the election - gotta sustain the cash flow somehow...
posted on 10/13/2012 5:33:19 AM PDT
("If a man will not work, he should not eat" From 2 Thes 3)
To: Lancey Howard
Not quite, Lancey. These enterprises are designed to even out the total payout
relative to the total dollar value of bets received. Intrade and other online binary books are, by definition, simply binary pools, otherwise known as repeating parimutuel (yes, the spelling is correct) pools, with a very small number of horses, typically 2 or 3, participating in a race. There is no "vig" per se, as with a traditional betting book such as Ladbroke's. Instead, every punter is charged a fee when the wager is placed, which fee replaces the typical vig and generates the profit for the pool operator, i.e. Intrade et al.
Nothing "ideal" about it; just like the futures markets, in a 2-horse Intrade pool there are exactly the same number of bets on horse A as are on horse B. Said another way, for every buyer of the proposition that horse A will way, there is a seller of that same proposition, just as in the corn, or crude, or copper futures markets. It is the fact that some subset of the group of punters on a given proposition are more eager to wager on the success of A rather than B (and thus will willingly pay more for their wager) that creates the "favourite".
Also, Intrade and other such pool operators don't "adjust" anything, ever. The punters do that over time by bidding more or less aggressively for their favoured horse. The "adjustments" are merely changes in price, no more and no less, and differ not one whit from the "adjustments" (price changes) seen in futures markets.
A comparison to stock markets here is technically invalid because the mechanisms of the 2 mkts, binary pools and stocks, are different. These binary pools do not have market makers, specialists, or their equivalent. Why? Because they don't need them. Intrade et al., while desiring as many wagers as possible, do not (ever?) employ people to entice the punters to wager by putting up a narrow(er) bid/offer spread, which, along with stabilising a market, are the functions of typical market makers.
As political indicators, though, Intrade and other such pools are -- as one poster has already noted -- utterly unreliable because their small size makes them VERY manipulable. Who on FR would have any doubt whatever that, if voter sentiment might be changed favourably with the expenditure of VERY few dollars, the Zerobama people would spend such a small sum in a New York taxicab minute?
posted on 10/13/2012 6:16:14 AM PDT
(What is the next tagline some overweening mod will censor?)
Thanks for your kind reply and explanation.
To: Lancey Howard
I believe Intrade is accurate. By the time of the election, I’m hoping BHO is below 50%. He’s at 60 now and likely 55 by weeks end. Intrade has it right.
Until the facts on the ground are known well enough to echo the actual result that is about to be officially announced anyhow, it’s so much Kabuki theater. Before that time, it follows the news cycles by 12 to 24 hours for the lack of any better guidance. At most, what it has to say to Mitt right now is the obvious: that if he wishes to win, he shouldn’t stop campaigning.
posted on 10/15/2012 5:31:14 AM PDT
by HiTech RedNeck
(let me ABOs run loose, lew (or is that lou?))
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