Odds bleg

Has anyone been tracking betting odds for the Federal Coalition and NSW ALP before and after their recent leadership changes? I’m curious to know whether the markets think that the two caucuses made the right decision.

Update: Skeptic points me to Simon Jackman, who observed that on the day the federal Coalition changed leaders, the Centrebet implied probability of an ALP win rose from 80% to 82% following Abbott’s win – implying that the markets thought Abbott was slightly less electable than Turnbull, but that there wasn’t a major difference between them.

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7 Responses to Odds bleg

  1. Skeptic says:

    Simon Jackman has been tracking the federal odds for ages and had a quick blog post about the market’s reaction to Abbott. I’m sure you could shoot him an email if you have a deeper question. http://jackman.stanford.edu/blog/?p=1469 (Occasionally his blog goes ‘dead’ for me… so if that link doesn’t work now try again in 12 hours and see how it goes).

  2. I recall someone or other noting ALP went from 1.16 to 1.14 after Abbott’s win.

  3. Simon Jackman says:

    My site has been flaky with server upgrades etc in the last couple of days. It should be ok now.

    Money has come back to the coalition since their price blew out past 5.00 immediately after Abbott won the leadership. See the time series graph on my site.

  4. I looked up Simon Jackman’s blog to check something (i was wondering whether the shift in odds was because of money coming in or the bookies’ judgement) but read that the effect of the Coalition’s odds blowing out made them more attractive (in a two – horse race odds of over $5 can look good): they have now pulled in to 4.10 with implied probablity of 77 per cent. http://bit.ly/7uazmx

  5. Andrew Carr says:

    The markets haven’t been too hot recently. The betting for who would win the Libs split was woefully tied to the prevailing wisdom. The day before Hockey was $1.60, with both Abbott @ 3.85 & Turnbull over $4.00.

    Equally the strong favouritism for a DD For $1.50 v $2.37 against after the CPRS went down seems to reflect short term evaluations over a wiser head as ought to dictate when cash is on the line. (It seems centrebet has taken down the bet as of today)

    Markets may have a decent track record at the end, but it would be interesting to see how much anxiety they reflect in fluctuations, and how tied this is to mainstream media commentary. Hard to study, but I’m yet to see the markets suggest something the professional pundits don’t already.

  6. Harry says:

    Andrew, haven’t you missed the point of betting markets. First, it’s no surprise that they would often reflect prevailing wisdom since they are effectively an aggregate of prevailing wisdom plus any other information that punters have available (also, there’s the possibility that betting odds may begin to influence “prevailing wisdom”).

    Second, since the betting markets only provide probabilities, the punters will still get it wrong sometimes but that in itself doesn’t undermine the general claim that the bookies are collating useful information. And surely the bookies (and the rest of us) can be forgiven for not gettting the Lib leadership outcome correct – it was a pretty unusual sequence of events which seems to have even caught many of the participants by surprise.

  7. Harry says:

    Ah, sorry, previous post was a response Andrew Carr. This one’s for Andrew Leigh.

    Andrew, looking at Simon’s data (http://jackman.stanford.edu/oz/Aggregate2010/bettingMarkets/centrebet/alpWinProb.pdf), perhaps the immediate movement in the odds (from 80% to 82% for an ALP win) is not as interesting as the movement (or lack of it) from the more stable periods prior to November 25 (when the first spill was moved and defeated) and since December 4 (three days after Abbott was appointed, perhaps enough time for punters to digest the news and the bookies to lay some stable odds).

    In short, the odds have hardly moved (76% vs 76.5%). In the intervening period, the odds spiked upwards (following the first spill attempt and the resignations from Cabinet the next day), increased a little further after Abbott’s appointment and then fell back sharply a couple of days later.

    So perhaps the two things we can draw from this episode are that:
    (a) Unsurprisingly, the bookies’ odds will bounce around a lot when there is increased uncertainty and a lot of new information to digest (and so it’s better to wait a few days before trying to learn too much from the odds); and
    (b) Surprisingly (to me), the betting markets don’t seem to think that the change of Lib leader matters much to the Libs’ chances at the next election.

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