Election Prediction – Using UK Market Odds

Studies find that political prediction (betting) to be better at predicting elections than polls.

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John Stossel, Fox Business Network reporter and his supervising producer Maxim Lott have put up a website showing the UK Prediction Market odds on the US Presidency.  They use the odds from Betfair.  Betfair is a market, not a bookie, share are bought/sold.  The current value of the Presidential Election Market is $2 Million.

I will update this monthly, click the follow button on the sidebar to get updates.

Since the site went up on October 13th 2015 the chart looks like.

Stosselmax
Market Prediction from October 2015

The result for August 2016.

StosselAug.jpg
Market Prediction August 2016

The same August results from Real Clear Politics shows a much closer race.

RCPAug

In 2012 Robert Erikson (Dept of Political Science, Columbia Univ) & Christopher Wlezin (Dept of Political Science, Temple Univ) published Markets vs. polls as election predictors: An historical assessment in Electoral Studies (Vol 31, pgs 532 – 539).  The abstract:

Prediction markets have drawn considerable attention in recent years as a tool for forecasting elections. But how accurate are they? Do they outperform the polls, as some scholars argue? Do prices in election markets carry information beyond the horserace in the latest polls? This paper assesses the accuracy of US presidential election betting markets in years before and after opinion polling was introduced. Our results are provocative. First, we find that market prices are far better predictors in the period without polls than when polls were available. Second, we find that market prices of the pre-poll era predicted elections almost on par with polls following the introduction of scientific polling.  Finally, when we have both market prices and polls, prices add nothing to election prediction beyond polls. To be sure, early election markets were (surprisingly) good at extracting campaign information without scientific polling to guide them. For more recent markets, candidate prices largely follow the polls.
(c) 2012 Elsevier Ltd. All rights reserved

See also FORECASTING ELECTIONS COMPARING PREDICTION MARKETS, POLLS, AND
THEIR BIASES by David Rothschild ( Ph.D. candidate in the Department of Business and Public Policy (Applied Economics), The Wharton School, University of Pennsylvania), Public Opinion Quarterly, Vol. 73, No. 5 2009, pp. 895–916

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