Rethinking Election Pessimism

Larry Kudlow suggests that there is reason for some optimism:

As pessimistic as I have become about Republican chances to keep the House, there may yet be hope. Front-page stories yesterday in the Washington Post and today in the New York Times essentially predict significant GOP losses and a growing likelihood that the Dems will finally capture the lower chamber for the first time since 1994. The reason I’m starting to rethink my pessimism is simply that the mainstream media always gets it wrong. As soon as they start ganging up on the GOP on the front pages, the likelihood becomes greater that the tide may be turning the other way.

I sure hope so. I don’t read Tradesports’ Republican House reelection odds as positively as Larry does. OTOH, I think that he is probably right about the MSM as a contrary indicator. My hunch is that the Tradesports number is too low, either because the market is being manipulated or because the only info the market has to go on comes from recent polls, which I suspect are not accurate. Only time will tell who’s right, of course, and I could be way off in my hunches.

Despite the Tradesports ambiguity, Larry’s post is a great rejoinder to Republicans’ gloom about the coming election and is worth reading in full.

UPDATE (Sept. 8): See Lex’s comments below, and also this post in which he and I continue to debate this issue.

9 thoughts on “Rethinking Election Pessimism”

  1. Funny how you are willing see the flaws in a system as perfect as a trading market when it doesn’t give you the answer you want. I am also highly entertained at the “reasoning” by washed-out coke- head economists like Kudlow, who can only come up with “the mainstream media usually gets it wrong,” so we have nothing to worry about.

    As Sam Rayburn, the Democratic leader of the House for many years, once said, “Any jackass can kick down a barn door. But it takes a carpenter to build one.”

    Good luck in November.

  2. We are winning in Iraq! Media gets it wrong. We have all the oil and energy sources we need: media gets it wrong. New Orleans nearly fully recovered: media gets it wrong. AIDS cured! media gets it wrong. etc etc Must we then assume that Larry has no reason to read the media any longer?

  3. I have no reason to doubt Tradesports. It seems consistent with other things I’m seeing. The GOP is going to get a sound thwacking in November. I say this as a lifelong GOP voter and supporter who wishes it were otherwise.

    Given how unpopular Bush is, this is overdue. Nothing to be surprised about.

    The Democrats will have an interesting two years. The voters seem to be angry with the GOP about spending and immigration — two issues on which the Democrats are worse than the GOP — and continuing the war, where the Democrats will have an advantage, probably — and gas prices — which no one in Congress can do much about. So, two years of Speaker Pelosi and we’ll see how things look in 2008. Maybe she will propose big tax increases and a major amnesty program. That would be funny. It would sure focus the opposition.

    Maybe Bush will start vetoing budgets. I sure hope so.

  4. I don’t know, Lex. For someone who expects his Party to do well in November, William seems a bit angry, don’t you think?

  5. Yes, it looks like the Democrats will win big. But when I lose heart, someone like William makes an argument & I try to figure out who is going to be convinced: first by a rather nasty ad hominem, and then by an analogy that doesen’t seem to apply to a party whose chief policy seems to be to break Wal-Mart & leave Iraq. Pelosi as carpenter?

  6. Fred, are you going to tell me you can fix America’s energy problems by voting for the party that’s worked to obstruct any expansion of offshore oil drilling (or, to give another example, ANWR) for the last five years?

  7. I don’t really care about William. He is typical, and if it had been my post he’d be deleted.
    All that ot one side, he is basically correct. As to his “anger”, it means nothing. The Donks are vicious and angry all day, every day these days. He’s typical of the pathology. They will be the same if they win and worse if they lose. That is no evidence of anything.

    Tradesports is pretty reliable on simple yes/no questions like this. It was very good on the 2004 election. I have no reason to think it is suddenly out of whack now that I don’t like the picture it is showing me. The GOP is way behind, but in the 40s it is not hopelessly out of the running. That is consistent with everything else I am seeing. I see no basis for a turnaround before the election, though events, dear boy, may change that.

  8. JG wrote:
    My hunch is that the Tradesports number is too low, either because the market is being manipulated or because the only info the market has to go on comes from recent polls, which I suspect are not accurate.

    1. A real-money prediction market with high volume is a good aggregator of dispersed information about that topic. The polls are of course one main source of information for the informed TradeSports trader.

    2. Manipulation works for half an hour. Not more.

    3. If you’re a Republican and wish that the GOP maintains its control on the US House in November 2006, what you could hope is a reversal of fortune for the Bush administration. In politics, anything can happen. That said, please don’t blame TradeSports.

    By the way, if you fear that TradeSports is being manipulated, go to BetFair, look at US Politics. The US political prediction markets have lower volume than TradeSports’ one, but usually they show STRICTLY the same probability. (BetFair displays the decimal odds. Take 1 and divide it by the decimal odds, and you’ll get the probability expressend in percent.) Check there, and if you see a difference, I offer you one kilogram of fresh cherrishes. Economists have indeed noted that there’s no arbitrage opportunities.

  9. Chris, you may be right about manipulation. If it’s being done it’s being done more subtly and with more money than in 2004. But if it looks like it’s being done subtley it’s probably more likely that it isn’t being done at all. (I wrote a couple of posts — here and here — on this subject back then.)

    It’s also possible that the prediction markets are off because the only information they have to go on — e.g., polling data — is off. Markets generally discount the best available information, but sometimes that information is of poor quality. A good example of such a situation was the recent Papal election, when none of the betting shops had accurate odds because almost no public information was available. I don’t know to what extent, if any, there is inadequate info now.

    It’s also possible that the markets are right and that the Republicans will lose the House.

    And it’s possible that I am right, either by chance or skill, and that the market, for the moment, is wrong.

    We will know soon enough.

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