By Jason Abbruzzese
Who will you (or would you) vote for in the 2012 presidential election? Now let’s say you have $10 to bet on a winner of the election. Is the answer the same?
Maybe, maybe not. What matters is that those are two different questions, and the results from the answers give us two very different sets of data. Polling has long been used as an implicit indicator of the likelihood of a certain outcome.
So polling is not perfect, but what’s the alternative? For people looking to hedge positions against the likelihood of one president over another, the wisdom of the market could be one answer.
The University of Iowa’s predictive markets, specifically the Iowa Electronic Markets 2012 Presidential Election Winner Take All contracts, (IEM) is one attempt to measure it.
The IEM is a futures market in which people can take positions based on certain outcomes. In this blog series we’ll be comparing the Real Clear Politics poll and the IEM Winner Take All to see how they deviate – or converge. Read more