Tuesday , October 22 2019
Home / S. Sumner: Money Illusion / Conditional probability and election odds

Conditional probability and election odds

Summary:
It’s often said that people have trouble processing information about probabilities. Election odds are a perfect example. For instance, all three of these claims are true: 1. Trump is overwhelmingly favored to win the GOP nomination. 2. If Trump is nominated, he’s expected to win the general election. 3. The Democrats are expected to win the 2020 general election. How can that be? The simplest answer is that there’s about a 20% chance that someone other than Trump will be the GOP nominee, and in that case the Dems are strong favorites to win (as they should be in my view, as a non-Trump candidate would imply a civil war within the GOP.) Thus Warren would be likely to win if she gets the nomination, but she’d be likely to lose if both she and Trump are nominated.  The Dems

Topics:
Scott Sumner considers the following as important:

This could be interesting, too:

Tyler Cowen writes Monday assorted links

Tyler Cowen writes Trust, Airbnb, and Himalayan villages

Tyler Cowen writes China facts of the day

Tyler Cowen writes Sunday assorted links

It’s often said that people have trouble processing information about probabilities. Election odds are a perfect example.

For instance, all three of these claims are true:

1. Trump is overwhelmingly favored to win the GOP nomination.
2. If Trump is nominated, he’s expected to win the general election.
3. The Democrats are expected to win the 2020 general election.

How can that be? The simplest answer is that there’s about a 20% chance that someone other than Trump will be the GOP nominee, and in that case the Dems are strong favorites to win (as they should be in my view, as a non-Trump candidate would imply a civil war within the GOP.)

Conditional probability and election odds

Thus Warren would be likely to win if she gets the nomination, but she’d be likely to lose if both she and Trump are nominated.  The Dems would do better with the second tier (Biden, Sanders, Buttigieg, Yang, etc.—but not Hillary.)

On the other hand, I would not take conditional probabilities of minor candidates too seriously, as the data may not be statistically significant when probabilities are low.  Nonetheless, I believe that a candidate from that group of four men would be more likely to win than Warren, even over Trump.  Warren looks like a weak candidate, which is why I expect the Dems to pick her.  They are dumb enough to fall into Trump’s trap, taking the Biden corruption allegations seriously.

PS.  Bill Weld as the GOP nominee?  LOL.  Who took that bet?

PPS.  If I weren’t so lazy I’d put money on Trump to be the GOP nominee.


Tags:

 
 
 
Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

Leave a Reply

Your email address will not be published. Required fields are marked *