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Did Joe Biden Win the Debate?

October 13, 2012

A pretty good way of finding out where things stand during the course of any event on which money is traded is to track the state of the in-play markets, and in particular the betting exchanges like Betfair. This is a particularly useful guide when it is not always easy to gauge all the variables, such as in Formula 1 racing, where there are pit stops, tyre degradation, in-race penalties and so much more to factor in. So when I watch a race led on the track by Lewis Hamilton in the McLaren but led in the markets by Fernando Alonso, it is to the Spaniard in the Ferrari that I will look to take the chequered flag.

It’s pretty much the same in a Presidential or Vice-Presidential debate, when the analysis of all those who are willing to venture their money to support their judgement comes together in the shape of a market price or prices. These fluctuating price lines represent variables such as the probability that one or other party will take the White House.

It was such a price line that, during the first ever UK Prime Ministerial debate in 2010, alerted analysts to the end of the Conservatives’ hopes of winning an overall majority in that year’s General Election. Before that debate, the likelihood of an overall Tory majority was significant. After the unexpectedly good performance in that debate by Liberal Democrat leader, Nick Clegg, and the unexpectedly bad performance of Conservative David Cameron, it was not. So much for those who say that debates don’t matter!

So what can we learn from the in-running markets about the debate between Vice-President Joe Biden and Congressman Paul Ryan? It is in fact possible to visualize the shape a contest is taking by simply following the flows of money tracing their way through the relevant markets. Interpreting the patterns of price lines to paint a picture is more science than art, but in truth it is a bit of both.

So what picture did the markets paint? It was a picture of the sort you would expect in a boxing match, when one boxer broadly dominates a round, with a mixture of penetrating jabs and controlled hooks, while his opponent blocks and parries to good effect, preparing to regroup in the next round. In this picture, it is the Vice-President throwing the telling blows and the Congressman adopting the well-rehearsed defensive stance.

And then it came to the judges to score the round. One of the judges was CBS News, whose poll of undecided voters gave the round decisively to Vice-President Biden by 50 points to 31. The other was CNN, whose poll of debate watchers appeared to give the edge to Mr. Ryan by 48 points to 44. Only later did we learn that the CNN scorecard had been tampered with, courtesy of a sizeable over-sampling of Republicans. By then, though, the narrative had been re-defined. The referee called it a draw, and the markets settled down again to where they were before the bell had sounded for the round to begin.

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