The Undercover Economist: First things first

Iowa and New Hampshire are tiny states, and they have too few electoral college votes to exert much direct influence over who runs for president. Yet everybody agrees that their indirect influence is vast. The Republican hopeful Mitt Romney was all but written off after failing to win in either state (although Michigan has given him a sudden resurrection); Democratic contender Hillary Clinton went from favourite to also-ran to favourite again after losing the Iowa caucus and then winning the New Hampshire primary. Does it make any sense that such tiny states largely determine the candidates’ fortunes, or does it simply indicate that voters are acting like sheep?

That question poses a false dilemma. Yes, voters are acting like sheep. But, yes, it all makes perfect sense. There are two good reasons why early success matters.

The first is that many donors want to back the winning candidate, whoever that is. Certainly, some donors are true believers, but many others also care about being on the winning side.

The remainder of this column can be read here. Please post comments below.

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