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November 23, 2010


IMHO Palin's nomination efforts will be aided by the machinations of the New York Times. In 2008, they supported McCain over other Republicans, both editorially and in their usual slanted news coverage. But, once he had the nomination sewn up, they slammed him most unfairly, including an article implying that he had an affair with a lobbyist -- an accusation that turned out to be unsourced.

After they invited Obama to write a column on what he believed, they refused to give McCain the same privilege. Their editors demanded to change McCain's statement of his beliefs. When he refused to let the Times define his platform, they refused to print his article.

IMHO the Times is playing the same game with Sarah Palin. Recently they had a Sunday Times Magazine profile that was fair and balanced. If and when she's nominated, I expect the Times to treat her even worse than they did McCain.

Obama is truly on the knife's edge

I have a really hard time looking at your first chart and believing any prediction you could make about Obama's chances, even if you knew with certainty what the GDP growth rate will be in 2012.

Sure you've picked a point that falls nearly on top of Bush in 2004. It's also virtually on top of Eisenhower in 1956 (who won with 57% of the vote) and Ford in 1976 (who lost with 48% of the vote) and is a worse economic performance than Bush in 1992 (who lost with 46% of the two-party vote).

I'm willing to believe that a better-economy = a better chance of the incumbent winning. But that's at least a 10-point spread, and about even odds of winning in a blowout or losing in one.

Jinchi's point is consistent with the R-squared, which appears to show that 38% of the variability in vote share is historically explained by second-quarter GDP growth rate. That still leaves 62% explained by other factors, which seems to this casual observer like a lot. Perhaps Obama will be successful in comparing the competence of his Administration with that of his predecessor.

Leonard J Savage's famous book, "The Foundations of Statistics," postulates that someone's personal or Bayesian probability can be deduced based on the odds at which that person would make a bet. According to this definition, someone who believes that Obama's re-election is even money would be happy to take either side of that bet as long as got odds in his favor.

It could be an interesting mental experiment to think about what odds would induce us to bet that Obama will be re-elected or to bet that he wouldn't be re-elected. Personally, I have no idea what odds I'd need to take either side of that bet. However, someone who has confidence in some model should be happy to make a bet if he gets odds substantially more favorable than that model says are fair.

Further to David's comment, on Intrade, futures on Democratic success in the 2012 presidential election are going for about 57. Those who feel more confident than that about Obama's chances can place their bets. (Those who feel less confident can place their bets on Republican victory, now selling at about 42. Or you can buy both contracts and essentially bet against a third-party victory, thus locking in a small but almost certain profit--though one that's eroded by transaction costs and the time value of money.)

Good point! Will tweet about this...

Brendan sees to implicitly assume that Obama will be the Dem candidate. OTOH the Intrade odds quoted by Rob concern a Dem victory. What are the odds that Obama isn't the 2012 Dem candidate?

Within my lifetime, two incumbants who could legally have run opted not to: Truman in 1952 and Johnson in 1968. Ten others did run, including unelected Truman 1944, Johnson 1964, and Ford 1976. So, a very crude model might give a 2/12 = 17% probability that Obama will not be the Dem candidate in 2012.

OTOH if we take a shorter experience period, every one of the last 7 incumbants who could legally have run opted to do so.

I think that the Palin 20 on intrade should not be used to gauge her chances of winning the GOP race. People will invest in futures contracts on the assumption that good news will come out on their investment and raise the value. A perfect example of this would be Palin. These folks are betting that Palin will announce her candidacy. This will trigger a buying spree on intrade and drive the price up. Then these folks will sell at the inflated price.
There's a Palin bubble on intrade.

@David in Cal

As long as he remains physically viable, I would consider it highly unlikely that Obama won't run. First of all, if he's going to drop out, it'll have to be very soon from now. In today's world, unlike in the 1960s, presidential campaigns begin essentially two years before Election Day. If Obama were to pull an LBJ in the spring of 2012 and suddenly drop out right then, it would have at least as devastating an effect on the Democrats' prospects as the removal of Thomas Eagleton from the vp slot in 1972.

Also consider that Truman and LBJ, though legally allowed to run in '52 and '68, would have essentially been seeking a third term, in which they would have ended up serving longer than any other president in history other than FDR. So I think there was less of a sense of legitimacy or necessity in their runs than there will be for Obama in 2012.

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