Wednesday, November 22, 2017

What's Going on with the Alabama Election?

Odds of GOP Victory in Alabama Senate Special Election

As Naked Dollar readers know, I have always been a fan of prediction markets, where people bet real money on political outcomes. They have the advantage of being both more accurate than polls, and real-time.

Above you can see the historical price chart for a GOP win in the Alabama special Senate election, i.e. the odds of Roy Moore being elected. Right now it's about 65%. 

This not only completely contradicts the national media narrative, but it contradicts the polls, which have his opponent, Doug Jones, with a slight lead.

My guess is that bettors are counting on a significant Bradley Effect, or in this case, a "reverse" Bradley Effect. Named after former Los Angeles Mayor Tom Bradley when he lost the '82 California governor's race despite being up in the polls, the Bradley Effect posits that some people are reluctant to tell a pollster that they will vote for a white man over a black, lest they not seem enlightened. In Alabama's case, they may be reluctant to tell a pollster that they would vote for an accused pedophile.

It will be an interesting test for the efficacy of prediction markets.