Intrade: Has Obama Already Won the 2012 Election?

In light of Rick Santorum's leaving the race to be the GOP presidential nominee, the 2012 election appears that it will come down to a contest between former Massachusetts governor Mitt Romney and the incumbent Pres. Barack Obama. For one who believes in the "wisdom of crowds" in conjunction with current Intrade statistics, it would appear that Pres. Obama will probably be re-elected in the November election.

I. Intrade and the 2012 Presidential Election

On the prediction market website Intrade, Pres. Obama currently enjoys a 60.7 percent chance of being re-elected. Comparatively, whereas Romney has a 97.7 percent chance of being the Republican presidential nominee, he only has a 37.5 percent chance of being elected president. In light of a possible third party candidate running that could help Obama and hurt Romney, even without a third party candidate, it appears that the president currently has a distinct advantage over the GOP contender.

Interestingly, in terms of Obama's chances on Intrade, for the lifetime of the market the president's chance of being re-elected has fallen below 50 percent consistently for a limited period between mid-September 2011 and early November 2011. Thus far for 2012, Pres. Obama's chances of being re-elected have been above 50 percent -- the current level around 60 percent has remained relatively constant since mid-February.

In light of the "wisdom of crowds", it would appear that Romney has his work cut out for him with respect to the general election -- an uphill climb. In terms of Romney's chances for being elected president in 2012, in the lifetime of the market Romney's chances have not crossed beyond the 45 percent level. While Romney's chances have been volatile given the rough GOP primary process, Romney's odds have risen from 10 percent in May 2011. That being said, Intrade's statistics would appear to reflect not only dissension in the Republican Party but also political apathy of the American populace.

The current RealClearPolitics average of polls for a general election between Romney and Obama currently show Obama having a 5.3 point lead over Romney, 48.5 percent for Obama and 43.2 percent for Romney. Historical statistics from RealClearPolitics show that Romney led against Obama for only two limited periods, a small period in September 2011 and a small period in October 2011. Aside from those two limited periods, Obama has been leading against Romney. Since the beginning of 2012, Obama has expanded his lead over Romney from 1.6 points to 5.3 points. It is significant to note that historical trends seem to reflect dissension in the GOP and uncertainty regarding who the party's nominee will be. That being said, the more recent gains of Obama over Romney can be presumed to be taking into account Romney's formidable, solidified front-runner status near Super Tuesday on March 6, 2012.

In January 2012 in the aftermath of the New Hampshire primary, I asked, "Is Romney already the last man standing?" At that time, Romney enjoyed an 86.8 percent chance of being the 2012 Republican presidential nominee. Even so, at that time Romney had a 41.7 percent chance of defeating Pres. Obama and being elected president. Comparatively, Obama had a 50.8 percent chance of being re-elected.

It's a bit interesting how Romney's chance of being elected president is low at 37.5 percent as compared to Pres. Obama's chance near 60 percent when Romney's process of gaining the nomination has been fraught with difficulty in the midst of a weak economy and rising gas prices. According to Rasmussen Reports on Tuesday, the Presidential Approval Index rating is -17. Per Rasmussen, whereas 24 percent strongly approve how Obama is performing his role as president, 41 percent strongly disapprove. According to Gallup's most recent weekly average as for how Pres. Obama is handling his job as president, 47 percent approve, 46 percent disapprove, and 8 percent have no opinion.

II. Dimensions and Dissension

An additional dimension to the 2012 presidential election to note that could change Romney's chances is the question of Romney's running mate. Were Romney to choose US Senator Marco Rubio from Florida or Wisconsin Congressman Paul Ryan to be his running mate, we could hypothetically see a spike in the odds of Romney's being elected president, but it remains uncertain as to how such an addition to the ticket would improve Romney's chances. Despite the RealClearPolitics poll average that shows Obama enjoying a 5.3 point lead over Romney, on Intrade there's a 20+ percentage point gulf in terms of Obama and Romney's chances of winning the presidential election. The addition of Rubio or Ryan to the ticket could help to close this gap a bit, but it is uncertain whether such an addition would give Romney a clear advantage over Obama heading into November.

Another dimension to the 2012 presidential election is that of a third party and dissension within the Republican Party. There has been some speculation that Ron Paul could run as a third party candidate. The nonpartisan, non-profit organization Americans Elect has also stated a desire to put forth a third party candidate. Some conservative commentators have suggested that the GOP believes that conservative voters will come home and rally around the flag to support Romney, but given Romney's attacks on GOP competitors and support for RomneyCare in conjunction with possible bitterness and resentment from Romney's negative attack ads, Romney may have problems getting the nation's conservatives to rally around him. The situation portends issues for the Republican Party going forward as we approach what has been touted as the most important election of this time period.

I would go so far as to suggest that Romney's securing the nomination portends problems not only for the Republican Party, but also for the American political process in general. Whereas a significant portion of the electorate may feel estranged in being given the choice between Pres. Obama and a Massachusetts moderate, the result could make for serious political apathy at a time when the nation is looking for leaders to unite the country. What is especially precarious is the fact that for some conservatives, the 2012 election will be less about electing Mitt Romney and more about voting Pres. Obama out of office. Viewing an election in this light may be advantageous for those who are leaning conservative, but this perspective becomes problematic given the political status of being the "leader of the free world". Conservative commentator Glenn Beck went so far as to say on Tuesday that he would rather vote for a shoe for president than Pres. Obama. The political polarization portends ongoing divisiveness in Washington and American society.

While liberals may be confident that Pres. Obama will be re-elected and while conservatives may be confident that Pres. Obama will lose the election, the political apathy and societal frustration that may develop going into November over issues like unemployment and rising gas prices could be problematic. Per Peggy Noonan's discussion on March 30, 2012 in the Wall Street Journal, "Obama has a largely nonexistent relationship with many, and a worsening relationship with some."

As I've previously suggested, given political polarization and societal frustration with the status quo, I would not be surprised if a significant number of Americans, in particular young Americans who are becoming apathetic to Obama's policies, were to begin looking toward Canada and/or Europe after the 2012 election. Alternatively, we could see regional movements asserting various ideological alternatives -- including the development of seasteading projects to counter perceived socialism or crony capitalism. The course of American politics remains uncertain. That being said, a lot could happen politically and economically between now and November.