They didn’t do well…
Kevin Drum on the betting markets miss this election:
[Y[ou know who else lost big? Betting markets. Here is Rick Maese of the Washington Post just a couple of days ago:
With control of Congress at stake in next week’s midterm elections, political observers and polling data both suggest Republicans have a strong chance of retaking the House, while the fight for the Senate is considered extremely competitive. The election betting markets, however, see less ambiguity, already essentially handing the House speaker’s gavel to Rep. Kevin McCarthy (R-Calif.) and giving Republicans about a two-thirds chance of controlling the Senate.
….Political observers study the ever-changing markets to assess candidates’ chances of winning. While traditional polling data might gauge voter sentiment from a specific period in the recent past, researchers say the betting markets offer more of a real-time snapshot as bettors react to events, endorsements and gaffes.
Hmmm. Here’s a betting market on control of the Senate:
That sure changed on a dime within a day of the election! Here’s the House:
That looks a little better on first glance, but it doubled between November 8th and 9th. Not so great! […]
Ordinary pollsters were a whole lot closer than this.
You can find a bunch more like these if you feel like googling for a few minutes. Nate Silver obviously has a personal interest in all this, but nonetheless here’s his explanation for why betting markets aren’t really that great:
One weakness of these markets is that they tend to follow the media narrative about the race more so than they do the underlying evidence. The source for this claim: yours truly, because I’ve been doing this for a very long time.
….The other weakness in these prediction markets is that the traders don’t have a lot of technical sophistication about election forecasting….There are some questions for which actually going through the process of building a model helps a lot, such as in determining how much an election forecast should shift in response to a modest but noisy shift in the polls.
I agree. Say what you will about betting markets, but the bettors themselves are mostly just talking to their friends and reading the same stuff everyone else does. Even aggregating several thousand of them doesn’t average out their systemic bias toward whatever their favorite call-in show is saying.
Yep. They don’t know any more than the rest of us. Why do people pay any special attenttion to them?