Thursday, July 26, 2012

It's Not Neck and Neck

If you follow the national media, they would have you believe that this fall's presidential race between President Obama and Mitt Romney is currently neck and neck. All of the stories talk about the polls being a tossup, with either Obama or Romney with a small lead such that when taking into account polling error, results in a statistical dead heat. The problem is that at this point the race is not neck and neck, nor has it been so for quite a few months. The reason is that the media only focuses on national polls of the general electorate, where in fact the presidency is decided by the electoral college and who wins what states.

As previously mentioned, there are futures trading markets dealing in political, sporting and economic events which give a much truer picture of the probability of future events. And in this regard the Intrade futures markets shows that President Obama is at this point a heavy favorite for re-election. At this writing, futures trading for Obama's re-election are at 57 percent, while trading for Romney is at 40 percent. Note that these do not add up to 100 percent, as there are traders in any kind of market who will take a flyer on a remote probability event, be it a bankrupt corporation coming out of bankruptcy having positive equity for the old shareholders, that a third party candidate will win the election, or that somebody other than Obama or Romney will be the Democratic or Republican nominee. Note that President Obama was trading around 50 percent for most of last year, giving strong hope to the Republicans that they could take the presidency. However when the economic picture began to brighten this year, Obama's percentage rose to 60 percent, dropping to around 54 percent upon signs of the recovery slowing down, but more recently turning up again with Romney having to go on the defensive on his days with Bain.

Confirming this viewpoint of the presidential race are comments I heard on the radio from a Republican political strategist. Rather than being enthusiastic about the national polls reflecting a close race, he instead lamented the inability of the media to focus on the fact that how the candidates will do in the battleground states is the only thing that is important. Without coming out and saying it, he was telling us at this point things don't look that great for Romney in the battleground states.

One might speculate why the media only focuses on the national polls without addressing the reality that at this point in time President Obama is in fact a heavy favorite to be re-elected. My guess is that the national polls are safe to report on because they are verifiable, whereas documenting the actualities of the electoral picture would be more difficult. As noted before, the press seems to take the same tact in its unwillingness to make a call on upcoming Congressional votes, even where futures trading indicate that it's relatively clear what the ultimate outcome is going to be.

Of course it's a long time between now and November and anything might happen. But at this point, most Americans are misinformed as to the current state of the presidential race, thanks entirely to the inability or unwillingness of the media to go beyond the national polls.

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