One interesting way to try to predict political outcomes is to allow people to bet on who will win and look at the odds that emerge. A number of sites are allowing people to do this for the 2008 American presidential election, with interesting results. Such sites include InTrade, Iowa Electronic Markets, and Casual Observer.
One option is to buy the right to $100 if a particular candidate wins the presidency. The cost of such a contract is reflective of the market’s presumed probability of that candidate winning. Here are some of the most recent prices:
Hillary Clinton: $46.70
Rudy Giuliani: $17.00
Mitt Romney: $9.50
Al Gore: $7.00
Barack Obama: $6.70
John McCain: $3.50
Newt Gingrich: $0.10
The people betting on Al Gore are probably wasting their money, given his repeated assertions that he will not be running. It will be interesting to see how the figures change when more candidates drop out, people choose running mates, and the two parties finally decide upon their nominations.
It is also possible to bet on which party will win the presidential vote. Bets on the Democrats are selling for $63.00. The Republicans only cost $36.40, reflecting much lower expectations about their probable electoral success.