Is the President a Bargain at Intrade?

The price for ten contracts at Intrade on Barack Obama winning the Presidential election has fallen some twelve dollars since September 29th, and fully seven dollars in the 24-hour period surrounding the first debate.  On the 29th, Obama’s ten contract price closed at about $79 but now is around $67.  Cautious fellow that I am I might not bite today, but I think the decline in Obama’s share price over the past week is not matched by any real change in the fundamentals of the election.

Nothing in Nate Silver’s forecast supports this pessimistic view.  His model characterizes the campaign as a relentless march to victory by the President with a winning margin of over one-hundred Electoral Votes.  Of course his model lags behind events like the debates since reliable polls take a few days to conduct.  It will be interesting to compare Intrade and Silver over the next few week as the polling results roll in.  Will the 538 model show a sudden drop in Obama’s chances of victory that was foreshadowed at intrade, or will Obama’s Intrade price more plausibly climb back up into the high seventies?

The rolling average of polls at RealClearPolitics shows the same general trend as Silver’s 538 model though not to so pronounced a degree as his estimates of the margin in the Electoral College.  Of course small variations in the popular vote produce large swings in the shares of the Electoral College. The “swing ratio” of the Electoral College is just under four, meaning an absolute increase of one percent in the popular vote predicts about a four-percent increase in Electoral Votes.

Intrade has some interesting features as a market.  Its volumes are so small that the campaigns can move the needle with a large purchase. Today’s volume is already 2-3 times that of a typical recent day. (Click on the chart to be taken to the Intrade charting page where you can customize your view.)

First thoughts on the first debate

Twenty minutes into this event I thought the candidates had managed to lose at least half the audience.  A snooze fest cuts both ways, though.

This is just the first of three rounds between these guys, and it is the round the incumbent generally loses.  He gives up ground simply by appearing on the same stage alongside the challenger.  So if you are going to lose a debate, this is the one.

The next round employs the uninformative town hall style and usually has the smallest of the three audiences.  That format militates against the candidates confronting each other directly.  Instead they are forced to respond to the citizen questioners which rewards politeness.

The third and usually most heavily viewed encounter will this year supposedly focus on foreign policy. Closing with that subject benefits the President.  I bet Obama’s campaign staff saw getting their opponents to agree to this order of topics as a major tactical victory.  Despite its official topic, though, I see the candidates turning round three into a much more wide-ranging and possibly more tendentious event.  Even so two full weeks will still remain before Election Day which blunts any effects even this debate might have.

In the NBC/WSJ poll I cited earlier, the candidates have essentially identical profiles in terms of strength of support.  Eighty percent of each candidate’s voters say they will “definitely” choose their man.  The remaining 20% is split equally between those who say they will “probably” vote for their chosen candidate and ones who say they are “just leaning.” Most of the viewers tonight were in those 80% categories and will not be swayed by what they watched.  A few of the small number of wavering supporters and undecideds may move in Romney’s direction after this debate, but they could easily swing back to Obama by the time the campaign draws to a close.

So while I would agree with Ezra Klein that Romney won this round, I also think that Obama’s strategy may have been to “lose the battle but win the war.”  I would not be surprised to see the President’s average lead in the polls shrink a bit further in the days ahead.  What would be very disturbing given the trends in the campaign so far would be for Romney to take the lead in most polls and hold it through the second debate.  Given that the President has lead in the vast majority of polls taken since June, to suddenly lose that advantage now would be a serious reversal of fortune.  We won’t know the answer to this question until early next week when the polls whose fieldwork ends Sunday are released.  And, of course, the battleground states are the ones that matter.  The national results are largely meaningless politically though they have a demonstrable influence on how the media covers the race.

A few appetizers before the debate

I have been looking at a couple of the polling reports from the past week.  Every single poll for every Federal race is listed at RealClearPolitics.  I was interested to see what support there was for David Brooks’s claim in today’s Times that Obama’s lead among white working-class women in the “battleground” states might explain his higher levels of support in those states compared to nationwide polling. Most polling reports do not break down voters into such small groups so finding evidence for his hypothesis is not really possible.  However, I did find some interesting variations in how men and women view President Obama when I looked at some of the state-level polls in the competitive states.

In the most recent PPP poll of likely voters in Ohio, men and women were surprisingly no different in their approval of the President.  Ohio men are an insignificant one point more approving at 49% compared to 48% of women. In another competitive Midwestern state, Wisconsin, women being more favorable toward Obama (+10%) than men, but the men only split one point unfavorable at 49-50.

In Florida, we again see the common pattern of greater support for Obama among women than men, but the level of male disapproval is higher in Florida.  There the gap between approval and disapproval for the President is +14% for women compared to -7% among men.  In Virginia, men are even more disapproving at -10%, while women at +13% are about as positive as in Florida.

It looks more and more like the auto bailout was the most politically astute thing Barack Obama has done in his four years in office!  I also think these differences between Midwestern and Southern competitive states shows that lumping together all the “battleground” states, as Brooks suggests, misrepresents a more complex reality.

One thing we can say about the battleground states is that politics is more competitive than in the states where the outcome is already known.  The recent NPR poll oversampled voters in the twelve most-competitive states and compared their responses to the totals nationwide.  The presidential approval question is +5 in the national figures (51-46), but -1 (48-49) in the competitive states.

However nothing struck me more than this remarkable, yet unreported item in the most recent NBC News/Wall Street Journal poll: Americans suddenly express a desire to see one party control all the branches of the Federal Government.  (Search for Q15.) The poll shows a consistent preference for divided government back as far as 1986 when NBC and the Journal first began asking the question.

Two years ago, as we headed into the 2010 off-year rout of the Democrats, Americans preferred divided government by more than two-to-one (62%-29%).  Now that ratio has shifted entirely in the other direction.  Fifty-two percent of their respondents endorsed a unified Federal government in the September, 2012, poll compared to 39% who prefer a divided regime.  That figure of 52% support for unified government is the highest ever recorded in the NBC/WSJ poll.  In no other poll since 1986 has a majority of registered voters endorsed complete partisan control over the Federal Government.

Perhaps our love affair with gridlock might be coming to a close.