Anti-Republican sentiment – and not Barack Obama – gave the Democrats the Presidency

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By Navin Kumar
Article ID: 139

Barack Obama has been sworn in as the 44^th President of the United States. He won by an impressive margin. But a question is worth asking: why did he win?

Finding the cause is an unusually difficult task: people are emotionally invested in Obama and really, really want to believe that he won because of his message of hope and change. But as economists and social scientists, it’s our job to separate the wheat from the chaff.  But how? Surveys are useless: if you simply ask someone why they voted for Obama, they may choose the most comforting answer (like “I want to heal America’s racial divide”) instead of the most honest one (like “I think Sarah Palin’s a bimbo”).

So you need a source that’s objective and non-partisan. Fortunately there is one: money. Even if you want Obama to win, if you were asked to put your money on him in a bet, you’d start asking yourself: do I think he’s actually going to win?

That’s where intrade.com comes in. Intrade is an online “futures market” which is a rather fancy name for what is essentially a gambling parlor. How it works is this: an event (like “Obama.President.2008″) is selling for – say – 48. This means the market believes that there is a 48% chance of the event happening. If you think the likelihood is higher: buy the contract. If you think the likelihood is lower: sell the contract. Thus the prices move up and down – just like a stock exchange.

Since these are serious people playing with real money, they don’t care whether of not Obama is better than McCain: they only care which one going to win. So looking at these numbers – and seeing what happens to them when certain events take place – tells us a lot about why the public went for Obama. He won with 52.9% of the popular vote and 349 electoral votes. In the United States, that’s arguably a landslide victory.

Obama wasn’t always poised to win: at the beginning of 2008, his Intrade price was running under 15%, one third of Hillary Clinton’s 45%. The total odds for the Democratic Party were over 60%. This basically means that it was far more likely that a democrat - but not necessarily Obama – was likely to be the next President of the United States. This might be an emotional damper for those who believe that Obama was essential to the Democratic Party’s revival: without him, the Democrats were actually doing quite well. In fact, since 2004, the odds of the Republicans winning in 2008 never crossed 50%.

By the time Obama won the Democratic nomination, his Intrade price was 60% – exactly the same as the Democratic Party was at the beginning of the year.

So what happened after that?

There was a very brief period where his Intrade price fell below 50%: that was just after John McCain selected Sarah Palin to be his running mate. Called the “Palin Bounce”, the choice briefly pulled Obama below 50%. But by the time the elections came around, his price was at 85. What caused that?

In three words: the financial crisis. People quickly blamed – and voted against – Bush and the Republicans. Voters were primarily anti-Republican and pro-Democrat. They were not specifically for Obama. Other suitable Democrats would have won the election.

Obama might be a great guy, he may bring about the change he’s promised, but he didn’t win because of his “fresh” treatment of Washington politics. Hillary Clinton’s ratings were soaring before Obama took center stage.

Obama won because a majority of Americans voted against Bush and the Republicans. Obama’s unique message is just icing on the political cake.

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