How Good Are Intrade Contracts As Predictors of Senate Election Results? A Look at 2008

A few days ago, I looked at how well Intrade contracts performed as predictors of the outcomes of races for the US Senate in 2006. You may recall that just before the elections, the Intrade contracts pointed to the victors in every Senate race. The same was true in 2008: the contract prices that I retrieved on 30 October pointed to the eventual victor in every race (assuming, as expected, that Al Franken is ultimately the winner).

But again, I wanted to examine how far in advance successful predictions could be made based upon these futures contracts. In early 2007, Colorado Sen. Wayne Allard announced his retirement. In May 2007 when I obtained my first information from Intrade, the contract was already indicated a Democratic victory. Ultimately, Mark Udall won this seat. At the end of August of 2007, Virginia Sen. John Warner told his constituents of his retirement. Within two weeks, former Governor Mark Warner announced his candidacy for the post. Intrade contract information obtained later that month indicated Mark Warner as the clear favorite, and he won election the following year. The third retirement announcement came from New Mexico’s Pete Domenici in early October in 2007. Congressman Tom Udall announced his candidacy almost immediately for the Democratic nomination and the state’s two Republican congresspersons did likewise for the nomination of their Party. By May of 2008, Udall’s ultimate victory was indicated by the pricing of Intrade contracts. At that same time, the Intrade numbers were suggesting the victory of former Governor Jeanne Shaheen over Sen. John Sununu in New Hampshire.

So, by May 2008, fully 6 months before Election Day, the ultimate winners were being “predicted” by the Intrade contracts. The other four Democratic pick-ups were not so indicated until much closer to the elections. By early October, Mark Begich’s win over Ted Stevens in Alaska, Jeff Merkley’s defeat of Gordon Smith, and Kay Hagan’s victory over Elizabeth Dole were indicated by the Intrade contracts. It wasn’t until a few days before the election that Al Franken’s (apparent) victory over Norm Coleman was indicated by the Intrade numbers.
Once again, all Senate races were could be correctly predicted by interpretation of these Intrade futures contracts, and most could be determined almost a month ahead of time. Unfortunately, I don’t have the appropriate information in order to compare the relative accuracy and timeliness of predictions based on the various polling that occurred in these two cycles. Hopefully, I’ll be able to obtain such data for the coming cycle. If anyone would like to help collect such information, I would welcome their assistance