The Odds September 2004 ATLANTIC MAGAZINE

Who Will be the Next President?

The market speaks

By Nathan Littlefield

In the neck-and-neck race between George W. Bush and John Kerry, even the slightest twitch in poll numbers can make headlines. Pundits have been issuing declarations about who will win for months. But some election junkies believe that "political markets" are where the smart money turns for the best predictions. These markets allow one to bet on the election's outcome by buying futures whose value will be determined by a candidate's share of the two-party popular vote (in 1992 H. Ross Perot was included). Since 1988 the Tippie College of Business, at the University of Iowa, has run the Iowa Electronic Markets, the premier political-futures market. We took a look at its predictions on July 1 of each of the past four presidential-election years, and compared them with the actual results. (It turns out that political markets aren't much better than pundits.)

2004 July 1 Result

George W. Bush 52.8% TBD

John Kerry 46.0% TBD

2000 July 1 Result

George W. Bush 48.5% 49.7%

Al Gore 49.3% 50.3%

1996 July 1 Result

Bill Clinton 51.9% 54.7%

Bob Dole 43.5% 45.3%

1992 July 1 Result

Bill Clinton 28.0% 43.3%

George H.W. Bush 35.9% 37.7%