Polls vs Markets

My friend Alan Warms sold his small company Buzztracker to Yahoo! last year and has been doing some great work inside Yahoo! since then. Yesterday, he sent me a link to their new election dashboard service which I have bookmarked and will now visit everyday until the election.

I like the fact that I can get everything I need to know in one page view with links to things I care about like the most blogged about political stories of the day. It’s very well done although I sure wish they’d done it in ajax instead of flash.

The thing that pops out at me when I look at the election dashboard this morning is that the race is very tight in the polls (47% Obama, 44% McCain). And the polls will clearly tighten in the next week as McCain benefits from the limelight of the republican convention.

But the election markets are not tight at all. Intrade has it at 60% Obama, 40% McCain and it hasn’t really moved in the past three months.

Chart1217595790701196357

Hub Dub has it at 70% Obama, 30% McCain and that also has not moved much in the past three months.

Hubdub

So why is it that the polls are tight and tightening and the markets are not? And are markets better predictors of news than polls? I suspect the answer to that is yes.

I’ve been placing a lot of bets lately on Hub Dub and I am having fun and engaging with the news in a way I’ve not done before. It’s the same effect playing fantasy baseball or football has on your enjoyment of the real game. And in the process, it may become a new way for all of us to think about the news.

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