Blog
David M Rothschild Posted on

Newt Gingrich’s likelihood of winning the Republican nomination plummeted in the prediction markets from nearly 40 percent midday on Tuesday to about 20 percent midday on Thursday, holding at 19.6 percent as of this writing. Gingrich still has a large lead in Real Clear Politics’ aggregated trend of national Republican polls with 33.2 percentage points to 22.7 percentage points for Mitt Romney and 10.0 percentage points for Ron Paul. Gingrich’s abrupt drop in the prediction markets is all about concerns over his strength in Iowa.

Click Here for the Full Text.

Continue Reading
David M Rothschild Posted on

When I predict the outcome of the Republican primary, I am predicting what the data tells me what will happen, not what I wish would happen. I applaud Paul’s strength of conviction, both when I agree and disagree with him. Paul’s main path to victory is winning Iowa, becoming the anyone-but-Romney candidate and then beating Romney. Accomplishing all three is an unlikely, but possible task and that is why the prediction markets have Paul at 7.4 percent to gain the nomination.

Click Here for the Full Text.

Continue Reading
David M Rothschild Posted on

The latest aggregated polling trend from Real Clear Politics has Newt Gingrich at 31.3 percentage points to Romney’s 20.3 percentage points (a massive lead), but the prediction markets still give Romney nearly 50 percent likelihood of attaining the Republican nomination, precisely 48.3 percent, to Gingrich’s 32.7 percent.

In this article, I present three main scenarios for the first five primary contests, leading to six possible outcomes over the subsequent five weeks. One scenario leads to a long battle between Gingrich and Romney. One scenario leads to either Gingrich victory, a long battle against Romney, or a long battle against another candidate. One scenario leads to either a Romney victory or a long battle against another candidate. Weighting the likelihood of all of these scenarios, and their possible outcomes, the markets conclude that Romney is more likely to prevail, but both candidates are less than 50 percent to gain the nomination.

Click Here for the Full Text.

Continue Reading
David M Rothschild Posted on

The latest aggregated polling trend from Real Clear Politics has Newt Gingrich at 31.3 percentage points to Romney’s 20.3 percentage points (a massive lead), but the prediction markets still give Romney nearly 50 percent likelihood of attaining the Republican nomination, precisely 48.3 percent, to Gingrich’s 32.7 percent.

In this article, I present three main scenarios for the first five primary contests, leading to six possible outcomes over the subsequent five weeks. One scenario leads to a long battle between Gingrich and Romney. One scenario leads to either Gingrich victory, a long battle against Romney, or a long battle against another candidate. One scenario leads to either a Romney victory or a long battle against another candidate. Weighting the likelihood of all of these scenarios, and their possible outcomes, the markets conclude that Romney is more likely to prevail, but both candidates are less than 50 percent to gain the nomination.

Click Here for the Full Text.

Continue Reading
David M Rothschild Posted on

On Thursday Mitt Romney fell below 50 percent likelihood to attain the Republican nomination for the first time since Oct. 3.

The chart shows the likelihood of attaining the nomination for the four leading candidates since Thanksgiving morning. A slight downward trend for Romney turned into a downward slide directly following Sunday’s Union Leader endorsement of Newt Gingrich, shown with the purple line:

Click Here for the Full Text.

Continue Reading
David M Rothschild Posted on

As the effective income tax rate has lessened, the payroll tax is an increasingly large share of the median American family’s tax bill and thus has become increasingly salient to many Americans. The chart, constructed from Congressional Budget Office data, shows how taxes have changed in the past few decades for the middle quintile of American households (i.e., those are between the 40th and 60th income level). In 1979, payroll and income taxes were about the same percentage of the median family’s tax burden. Now the payroll tax is approaching 70 percent of the median family’s tax burden and the income tax is closer to 20 percent.

Not only is the payroll tax increasingly meaningful to many Americans, the payroll tax rate has a very direct impact on the U.S. economy; the chief economist for Moody’s predicts that returning payroll taxes to 6.2 percent for employees and employers would shave about 1.7% percent off of GDP. The current payroll tax deduction provides about an additional $1,000 per median American family; the proposed payroll tax deduction would provide 50 percent more, or $1,500 per median American family. Since most American families do not have excess income right now, they would spend much of the extra money stimulating the economy.

Click Here for the Full Text.

Continue Reading
David M Rothschild Posted on

Nate Silver argues in the New York Times that we should not judge Union Leader endorsement (given to Newt Gingrich on Sunday) on whether the candidate wins, but on whether the candidate gains in the New Hampshire polls.

The markets tell a different story: The endorsement’s biggest benefit will not be in New Hampshire at all. It will be in helping Gingrich become the final anyone-but-Romney candidate. The right wing Daily Caller noted this possible benefit; it quotes Republican consultant Dan Hazelwood that “[the endorsement] is a blow to everyone [else] trying to be the anti-Romney.”

The chart shows the likelihood of winning the Iowa and New Hampshire primary contest for Gingrich and Romney over the last two days. The likelihood in New Hampshire moved slightly on Sunday morning, but is very flat. Romney is still in complete control with 78.1 likelihood of victory. Not shown on the chart, the race for second place in New Hampshire also is steady, with Gingrich leading with 39 percent likelihood. Yet, the likelihood in Iowa has changed dramatically, with Romney’s small lead now a large lead for Gingrich (36.0 percent to Romney’s 24.5 percent).

Click Here for the Full Text.

Continue Reading
David M Rothschild Posted on

With his polish and confidence, Gingrich looks and sounds like a much more plausible anyone-but-Romney candidate than his immediate predecessors in that spot proved to be. Yet the prediction markets still call out Romney as the heavy frontrunner, no matter what the polls may be saying today.

Click Here for the Full Text.

Continue Reading
David M Rothschild Posted on

Should the present wave of Newt-mentum crest and then flag, can anyone else in the field effectively seize the anyone-but-Romney standard? A survey of the prediction markets suggests that’s unlikely.

Click Here for the Full Text.

Continue Reading
David M Rothschild Posted on

President Barack Obama is now leading in polls against each of the individual Republican opponents he may face on Election Day. And for the first time in months, Obama is leading against a “generic Republican” opponent. It’s true that polls conducted 350 days before an election have very little predictive power–but they are a meaningful indicator of the public mood as the primary season lurches into gear.

Click Here for the Full Text.

Continue Reading