Sunday, April 27, 2008
Since McCain's nomination there has been an increasing number of "strategic voters" on the part of republicans hoping to give Hillary Clinton an edge. Strategic because Senator Clinton is the last person a typical republican would vote for in a general election. Take this exert from a strategic voter on http://www.mymanmitt.com/, a blog recently renovated from supporting Mitt Romney to supporting the republican party;
"If I were in a state that had an open democratic primary, I would cast a ballot for Hillary Clinton. Let me tell you why.Between Hillary Clinton and Barak Obama, I believe McCain is much more likely to beat Clinton. One of the main reasons is because the most effective attack available to the Democrats, in my opinion, is going to be to paint McCain as a warmonger. Clinton's ability to do this will be severely undercut by her vote to authorize the war in Iraq..."
More evidence that Hillary Clinton is gathering illigitamate strategic votes from Republicans can be found in the political futures market. Futures markets like intrade.com allow people bet on who they think will win the democratic nomination or the general election buy buying futures. My research published on http://strategicvoting.blogspot.com/ finds that the price of McCian's futures correlates positively with Clinton futures. A simple linear model shows that when Clinton's odds of winning the nomination go up, McCain's odds of winning the general election go up as well. The opposite is found to be true for Obama. The average poll on pollster.com shows little evidence to this conjecture, likely because polls or being manipulated by strategic voting.
All this evidance points to one obvious conclusion for the democratic party. If you want to beat McCain in November, don't let republican strategic voting trick you into nominating Hillary Clinton. If, however, you are not entirely convinced that a substancial number of Hillary votes are coming from strategic voters try this Google test at home. Google, strategic voting "vote for Clinton", and then Google, strategic voting "Vote for Obama". Compare the number of hits and draw your own conclusion. This google test is robust to a number of different permutations in search words.
Joseph Eugene McPhail
"A Strategic Vote for Hillary Clinton...If I were in a state that had an open democratic primary, I would cast a ballot for Hillary Clinton. Let me tell you why.
Between Hillary Clinton and Barak Obama, I believe McCain is much more likely to beat Clinton. One of the main reasons is because the most effective attack available to the Democrats, in my opinion, is going to be to paint McCain as a warmonger. Clinton's ability to do this will be severely undercut by her vote to authorize the war in Iraq. She can't very well blame McCain for voting for war in Iraq when she did as well! On the other hand, Barack gets to sit back and claim he was against the war from the beginning and saw the hubrous of running in there thinking it would all be peachy keen. I think this attack from Barack could be very effective."
see the original at
If votes from lieing Republicans are the only thing keeping Hillary Clinton in race she should drop out. Accepting support from the apposing party only discredits her image.
Saturday, April 26, 2008
The big question in the political realm today is who between Hillary Clinton and Barack Obama has a better chance of beating John McCain come November. Both candidates have been quoting different statistics from pollster.com, some support Hillary while others support Obama. But while polls only show a small advantage for Obama, the political futures market* on intrade.com points strongly toward Obama as being a better candidate for beating McCain.
The question of who has a better chance of beating McCain in November can be answered uses futures prices in a more reliable way then in a national poll. For one thing, people can lie in national polls. They are anonymous and don't stand to loose anything if their opinion is proven worng. On the other hand, people betting in the futures market stand to loose cash and have no incentive to move a national poll on way or the other.
The answer to who can beat McCain rests in how the demand for McCain futures changes with increases in demand for Obama or Clinton futures. If McCain futures increase in value Clinton futures increase in value then investors believe that McCain has a better chance of winning if Hillary wins the Democratic Nomination. If no relationship exists between McCain futures price and Clinton's then investors do not perceive there to be any difference between Obama and Clinton in terms of their edge over McCain.
The data points strongly in favor of Obama at being better able to beat McCain in a general election. When Obama's future's price goes up by $1 (10% better chance) then McCain's futures price for winning the general election fall by $0.13 (1.3% worse chance). An opposite and slightly larger effect is true of Clinton futures where a $1 increase for her futures price leads to a McCain's futures price for winning the general election going up by $0.16 (a 1.6% better chance of winning the general election).
Note to Statisticians: These results are significant at the 10% level and come from data based on the month of April. The data is available at intrade.com. To replicate these finding use a simple regression of McCain closing futures price on the "anyone in the GOP to win the general election" as a control, and then use Obama's and Clinton's closing futures price for winning the nomination in two separate models to avoid multicollinearity problems. No other control variables are needed to see these results.
The evidence of strategic voting comes from the huge difference between the futures price estimates and national polls on who is better able to beat McCain in November. The average poll on pollster.com for the month of April shows Hillary with a 1.1% smaller chance of beating and Obama with a 0.2% better chance of beaitng McCain with some individual polls supporting wither candidate. The estimated difference based on the futures market where voters stand to loose cash for being wrong has Obama with a 24.8% margin to beat McCain while Hillary stands to loose at -13.2% margin. This difference is huge. Anonymous polls are notoriously bad at giving unbiased estimates compared to markets that require voters to “put their money where their mouth is”. The reason why the estimates from a futures market would differ so strongly from those of a poll rest in who stands to gain from Hillary winning the nomination. The Republican party seems is the only party who could benefit from over estimating Hillary Clinton's chance of beating McCain besides supporters of Senator Clinton.
Further note to statisticians: The margin difference calculation can be replicated using the coefficients from the ordinary least squares analysis. Hillary Clinton futures as of April 25th is trading a $1.75. If she wins the nomination, her futures price will need to raise from 1.75 to 10 which, given our analysis, will raise McCain’s futures from 40% to 53.2% leaving Hillary with only 47.6% to win in November. A similar approach can be done for Barack Obama leaving him with 62.4% to beat McCain's 37.6%.
If you have any questions reguarding this analysis or need help getting the same results feel free to email me, Joseph Eugene McPhail, at email@example.com. Thank you for your interest.
Evidence of Strategic Voting
Relationships between Obama, Clinton and McCain’s Futures Prices
A panel data analysis a futures market shows Barack Obama will have a better chance of beating John McCain in the general election. A futures market for the presidential candidates exists on intrade.com. Using data from this source I constructed two simple regression models for predicting McCains futures price for becoming president of the US. Significant results show that an increase in Hillary Clinton’s chance of winning the nomination by 10% lead to a 1.6% increase in McCain’s chance of winning the general election. An opposite effect is true for Obama’s chance of winning the nomination.
Additional results show that while the dollar voting public recognizes the significantly better chance Barack Obama has at beating McCain, national polling institutions like pollster.com do not. National polls make random telephone calls and ask opinions anonymously. This allows Republican voters to vote strategically for Hillary Clinton in hopes of keeping the Democratic party in tangles and possibly pitting McCain against a weaker candidate, namely Hillary Clinton.
Data: From intrade.com
See end for data from pollster.com
The Political Futures Market
The futures market allows anyone with a credit card to bet on which candidate they think will win the nomination and/or general election. The data used in this paper come from intrade.com, a popular futures market that allows users to buy futures for events such as; Hillary Clinton to win the democratic nomination and John McCain to win the general election. The maximum payoff for any future in this market is $10, which can be interpreted as 100% chance of winning. For example, a futures for a candidate like McCain winning the general election selling for $39.2 can be interpreted as McCain having a 39.2% chance of winning.
My analysis asks whether the dollar voting public believes either Hillary Clinton or Barack Obama have a better chance of beating John McCain in a general election. Then I compare these results to a weighted average of national polls using data from pollster.com.
To do this I used two regression models. The model is used to predict John McCain’s futures price for winning the election. Each model has only two right hand side variable. Both models use the futures price for the GOP winning the general election. The first model uses Hillary Clinton’s futures price for becoming the democratic nominee. The second uses Obama’s futures price for becoming the democratic nominee. No fancy statistics were used, just ordinary least squares.
These models allowed me to estimate the relationship between Obama’s and Clinton’s nomination futures prices and McCain’s futures for winning the general election. My results show that the dollar voting public (in contrast to the polled public) believes Obama will have a better chance of beating McCain in the general election and by a significant margin. These results can be recreated using data from intrade.com. My analysis focused on April 1st through April 25th.
GOP to win General Future
Adj R^2 = 0.2585
GOP to win General Future
Adj R^2 = 0.2544
The coefficients for Obama’s and Clinton’s futures price in predicting McCain’s futures for winning the general election are both significant. With 95% certainty Hillary’s future’s price has a positive relationship with McCain’s. Specifically, an increase in Hillary’s chance of winning the nomination by 10% is estimated to lead to a 1.6% increase in McCain’s chance of winning the general election. In contrast, with 90% certainty Obama’s future’s price has a negative relationship with McCain’s. Specifically, an increase in Obama’s chance of winning the nomination is estimated to lead to a 1.3% decrease in McCain’s chance of winning the general election.
At this stage in the election the probability of Clinton winning the nomination should be the inverse of Obama winning. An efficient market should therefore present equal but opposite differences between Obama and Hillary’s price on McCain’s price. This relationship is given in scatter plot #1.
Given these differences we can estimate what probability each candidate has at beating McCain in the general election. As of 7:53pm central time April 25th McCain’s future’s for winning the general election is selling for $3.92 while the GOP futures for winning the general election is selling for $4. This difference is due to the small chance that McCain may not end up being in the general election (health problems or a crippling scandal). Assuming McCain will compete in the general election, I estimate his base probability of winning at 40% which is conditional on the current futures prices for Obama and Hillary. For Hillary to take the nomination, her futures price will need to raise from 17.5% to 100% which, given our analysis, will raise McCain’s futures from 40% to 53.2% leaving Hillary with only 47.6%. If Obama takes the nomination McCain’s futures will decrease by 1.3% for every 10% increase in Obama futures. Obama is currently trading at 81.2%. Taken to 100% this will cause McCain futures to be worth 37.6% leaving Obama with 62.4%. These differences are huge and are nothing like the results seen in national polling estimates.
Evidence of strategic voting
In contrast to the results from the voting public, results from pollster.com show slim differences between Obama and Clinton’s chance of beating McCain in November. An average of the polls on pollster.com for the month of April have Hillary with a 1.1% smaller chance of winning against McCain. In contrast Obama has a 0.2% better chance of winning then McCain.
Evidence from the futures market tells a completely different story. According to the futures market analysis Obama should be given a 24.8% margin against McCain while Hillary should have a -13.2% margin (see previous section for calculation). This difference is huge. Anonymous polls are notoriously bad at giving unbiased estimates compared to markets that require voters to “put their money where their mouth is”. This means that something is causing polls to become systematically biased toward Clinton, and by something I mean Republicans.
Why? Judging from the data, the average trader believes Clinton has a much slimmer chance of beating McCain then Obama. Because of this any increase in Clinton futures will follow with a surge in McCain futures price. When polling agencies call asking voters, particularly those who will vote for McCain, who they think has a better chance of beating McCain, they may say Hillary in hopes of giving her an edge over Obama. Even if Republican’s can’t give her a victory, they can prolong the nomination process long enough for McCain to get a running start.
These results can be replicated by downloading data from intrade.com for the month of April 2008.
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