Donald Trump is the leading 2016 Republican presidential contender, you say? Wanna make a bet?
Last month, in the days immediately preceding Donald Trump officially throwing his hat into the 2016 Republican Presidential race, I stressed the vital importance of ignoring everything he does in the realm of politics.
It seemed like reasonable advice. Trump has flirted with politics in the past, but had always backed out before actually having to do anything. The murmurs he made in 2012 ultimately seemed more like a way for Trump to drum up ratings for The Celebrity Apprentice than actually testing the waters for a presidential run.
However, after Tump paid a bunch of actors to cheer during his campaign announcement, something weird happened—he started winning. A recent Washington Post-ABC News poll saw Trump polling at 24 percent, that’s 11 points above his closes rival, Wisconsin Gov. Scott Walker. It’s the largest lead any candidate has maintained in the Republican race thus far. And even if you count the poll’s 3.5 percent margin of error entirely against Trump, he still ekes out a 4-point lead, which is also his current polling average.
A conspicuous volume of ink has been spilled trying to decipher why Trump’s message has resonated with such a large segment of voters, who apparently seems to genuinely appreciate unambiguous racism against Latinos, maligning the personal integrity of war heroes, tweets accidentally honoring the service of Nazi soldiers, and even more racism against Latinos.
While Trump’s poll numbers are good, there’s another metric by which candidates’ are judged on their electability and, in that sense, Trump isn’t doing so hot.
Think of PredictIt.org as a stock market for politicians. Run by Victoria University of Wellington, New Zealand, PredictIt.org allows people to essentially place a bet on the outcomes of political events, such as a presidential primary. Each event, like a candidate winning the election, is priced somewhere between zero and one dollar. People can buy shares that each pay out $1 depending on whether or not a given event occurs. Since prices are adjusted in either direction based on trading volume, the price of a given share effectively predicts the likelihood of a given event based on the collective wisdom of the market.
For example, on the question of whether or not Greece will stop using the Euro by the close of 2015, shares are currently trading at $0.20, down from $0.48 exactly one month prior—meaning the market thinks a Greek exit from the currency is increasingly unlikely.
Utilizing the wisdom of the crowd, prediction markets like PredictIt can often produce uncannily accurate results. In the 2012 presidential election, a similar market called Intrade correctly called elections in 49 of 50 U.S. states. Four years earlier, it only missed the exact division of electoral votes between Democrats and Republicans by a single congressional district. A 2009 study in the journal Public Opinion found that prediction markets tend to outperform polls, especially early in a given election cycle.
The reason for this accuracy is simple: When there’s actual money on the line, people tend to bet using the best information they have rather than on what they’d personally like to happen. So, in the world of PredictIt, how does Tump fare?
Not exactly a runaway lead.
When actual money is on the line, Trump is tied for seventh rather than first. He’s 36 points behind the front runner, not 11 point ahead. In fact, when PredictIt.org fist started taking bets on Trump’s chances, he was listed at $0.17 a share. He’s currently only at $0.11.
So, despite Trump’s poll numbers, the smart money is on not taking him seriously as a candidate. You can follow the advice of the Huffington Post and The Onion and treat his campaign as a can’t-look-away train wreck that should be filed under entertainment rather than news. Or, the next time Trump says something horribly racist, you can look over at Hillary Clinton and watch her Cheshire Chat grin snake from one ear to the other. Or, you can do as I suggested last month and look at this picture of a dog weaning an elephant costume instead of reading any more stories about Trump:
It’s really your call.
Photo via Gage Skidmore/flickr (CC BY 2.0) | Remix by Max Fleishman
