Republicans Strategically Voting for Clinton

Life as a repubilcan has become exceedingly boring since the nomination of John McCain. Until democrats can choose between Hillary Clinton and Barack Obama, repubicans will just have to bid their time, or will they?

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

Evidence of Strategic Voting in Political Futures Market

The Big Question

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 joseph.e.mcphail@gmail.com. Thank you for your interest.

*What is a futures market? The political futures market allows anyone with a credit card to bet on which candidate they think will win the nomination and/or general election. This form of market is more often associated with the trading of buying a selling of financial assets, but can also be used for events such as who will win the presidential election. Anyone can go to intrade.com and buy a futures for Obama, Clinton or McCain for a price of less then $10. If your candidate wins you receive $10. If they loose you get nothing. Before the election is over you have the option to sell your futures back to someone else. If the chance of a candidate like McCain goes up for winning the election then people from around the globe rush to buy his futures until the price rises to better reflect his 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.