A Waltham Review Quick Take
Election betting markets, where bettors can place wagers on different electoral outcomes, provide market-implied indexes of the likelihood of different election-related outcomes. Hillary Clinton’s recent health scare has opened up an interesting wedge in these market-implied probabilities for the 2016 U.S. presidential election.
According to Betfair.com, a market for which Maxim Lott and John Stossel have provided a convenient front end, the point estimate of the probability of a Clinton victory has fallen by 7.7 percent to 61.5 percent as of 10:20 this morning. The probability of a Trump victory has risen by 2.6 percent to 30.5 percent. The probabilities of Stein and Johnson victories are unchanged and sum to less than 0.5 percent.
Clinton’s recent health scare appears to have hurt her prospects and helped Trump’s. The positive impact on Trump’s prospects does not appear to have matched the deterioration in Clinton’s. Instead, a bit of a wedge has opened up in the data, which indicates that the markets are factoring a small (< 10 percent) but noticeable likelihood of a victory by somebody not currently among the race’s four major candidates.
(Artwork: Pieter Cornelis “Piet” Mondrian (Dutch, 1872-1944) Composition in Red, Yellow, Blue and Black 1926)