Prediction Markets Accurately Predict

Michael Rozeff reports on what the prediction markets are saying :

Elections are due in 2006 and 2008. The market expects Republicans to end up controlling the Senate after the 2006 elections. The probability of Republicans maintaining Senate control is about 75 percent. (If you bet 75 cents on the Republicans and they win, you’ll get back $1. If you bet 25 cents on the Democrats and they win, you’ll get back $1.) The House race is quite different. There the probability of the Republicans holding the House is 46 percent. That makes the Democrats slight favorites to win control.

Should the Democrats, who currently favor Hillary Clinton as their nominee, run her for office in 2008? Probably not, according to the prediction markets. At present, frontrunner Clinton has a 42 percent probability of winning the Democratic nomination, while John McCain leads the Republican field with a 38 percent chance. There are significant chances that others may win each of these nominations. However, at present the market gives Clinton a 20 percent chance of winning the presidential election and McCain a 22 percent chance. According to these Tradesports markets, the Democrats would therefore be wise to look elsewhere for a candidate. Are politicians sneaking a look at these prediction markets? They should.

The marginal cost of answering a poll is small.Nothing like putting money on the line.