The Palin Republican Convention bounce seems to be having a continuing effect on the presidential electoral vote simulation based on the Intrade Prediction market data of September 16th. As described earlier, I use the Intrade data to generate a probability for each state of tghe Democrats winning that states electoral votes. I generate 1000 Monte Carlo simulations based on these probabilities.
This week the chart shows that the the Democrats win with more than 270 electoral votes only 46% of the time. This is the first time that the simulations predict the Republicans winning more than half of the time. I think that we could see this coming as the prediction markets and polls continue to digest Sarah Palin's popularity and McCain's bounce. FiveThirtyEight.com shows similar results based on their excellent simulations based on state polls, with only 44.6% of simulations with an Obama victory.
As a prisoner of Excel as my math, simulation and graphing program, I am jealous of Yahoo's new election tracker dashboard that uses either state polls or the Intrade prediction market data to show the electoral vote results. It made me notice something interesting about the Intrade prediction market data. If I just use that data, as Yahoo does, to predict whether a state will go Democratic or Republican, the results is that the Democrats win with 273 electoral votes. But the prediction markets have been shown to represent the collected estimated probability that the players expect for a particular outcome. So while Delaware options are at 95cents (on the chance of $1.00 if the option pays) for the Democrats which makes that a pretty sure bet, Colorado is 55cents Obama vs 47.6cents for McCain which makes that close to even odds. That's why I like my simulation approach better.
The table below (click it for larger and more readable) compiles the simple sum of the prediction market data and then breaks out strong states, those with 60% chance of one of the sides, vs weak states, those with less than a 60% chance for one of the sides. It is there where you can see the closeness of the race.
Remember that in the simulation even Delaware could go for the Republicans 5% of the time. Highly unlikely but possible, especially with the potential error of the data we are using. A state like Colorado could go either way. The progression over two weeks since Sept 2nd doesn't seem to put more electoral votes in play in the weak states (51 to 56), but it does seem to move some weakly Democratic ones to the weakly Republican column. This week the states that are weakly Democratic are Colorado, New Hampshire and New Mexico, while the weakly republican states are Nevada, Ohio and Virgina. On Sept 2nd the states that are weakly Democratic were Colorado, New Hampshire and Ohio, while the weakly Republican states are Nevada, and Virgina. As the pundits have said, Ohio and Virgina are going to be important, and even some Western states are going to have a role to play