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The Betfair Prof: "Three years on... and little has changed!"

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Professor Leighton Vaughan Williams explores who the betting markets say is the most electable candidate on the eve of Super Tuesday

On Wednesday, November 3, 2004, the day after the US Presidential election, followers of the betting markets were celebrating the market favourite winning every single state of the union, an amazing 50-leg accumulator. Less noticed on that day were the markets available about the Democratic and Republican candidates for the 2008 election. By clear water Senator Hillary Clinton was leading the pack to represent the Democrats in '08 while Senator John McCain stood at the head of the pack to be the Republican nominee. Fast forward three years and little has changed. Both have firmed up as hotter favourites than they were three years ago but they both still hold the pole position they held as morning broke after the 2004 night before.

Just as interestingly, the post-2004 election markets were predicting a win for the Democrats in 2008. Again, not a lot has changed, though the party of Clinton and Obama is a somewhat firmer favourite now than it was in November '04 to regain the White House.

Perhaps just as interestingly, perhaps more so, is what the markets tell us about who would be the most electable candidate for each party if nominated. This can be calculated by a technique known as conditional probability in which you identify the probability implicit in the market odds about a particular candidate winning the Presidency and also about them winning the nomination and dividing. For example, if a candidate has a 20% chance of winning the Presidency but a 60% chance of winning their party's nomination, the conditional probability of them winning the White House if nominated is just 1 in 3.

On this basis, the most electable candidate for the Democrats in 2004 was John Edwards. In the event they chose John Kerry and lost. With the election turning on a few votes in Ohio it can convincingly be argued that a different decision in '04 would have spelled the end of the Bush presidency four years early.

As I write, little more than a day before the polls open in more than 20 states of the union, the conditional probabilities have Clinton and Obama on a knife-edge and there's no clear picture as between McCain and Romney. On this basis, the voters may as well (this time at least) choose the candidates they want ... and let the best man (or woman) win.

Professor Leighton Vaughan Williams is the Director of the Political Forecasting Unit and Betting Research Unit of Nottingham Business School, Nottingham Trent University

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