One week til we finally get some results!
The decisions traders make in betting markets are largely based on the stories they tell themselves about what could happen. If one outcome sounds increasingly plausible, it will increase in value, even in the absence of hard data. And betting markets are amazing at linear extrapolation. Something going up? It’ll keep going up! (See: Warren 54c in September; Bloomberg 15c now). So with that in mind, let’s write out the best stories one can tell oneself about how each candidate could win Iowa:
Last week, I wrote that Bernie was overpriced. He proved me wrong by then leading in several subsequent polls (most importantly, the well-respected NYT/Siena poll that for some godforsaken reason comes out at 5am on Saturdays). What’s his case?
Bernie wins Iowa when Liz continues to fall and caucusgoers attending precincts where she isn’t viable and can’t become viable mainly go to him. He benefits from youth turnout exceeding older turnout, as DMR and NYT/Siena suggest. And he benefits from Klobuchar and Pete having enough strength to exceed the viability threshold in several precincts, depriving Biden of necessary delegates. He has the momentum and the organization to get at least 20% of the delegates on a bad caucus night, and he only needs a little bit more to take the lead outright.
Joe Biden wins Iowa because polls like Suffolk are right, because older voters who support him but didn’t say they would caucus end up turning out anyway, because Liz stays strong enough to keep Bernie from running away with all her delegates, and because Klobuchar doesn’t rise high enough to truly threaten him. His edge in a close finish comes from the overlooked satellite caucuses, where the snowbird locations will probably favor him.
Pete Buttigieg doesn’t win Iowa. Okay okay. He wins because Biden fades late, because Klobuchar rises enough to steal some Biden support and make it a true 5-way split, and because Liz is strong enough to block Bernie from getting all the delegates in many precincts. He also wouldn’t mind getting a few of the “not-Bernie” Liz supporters in precincts where she doesn’t reach viability and where Bernie isn’t as strong (suburban Clinton precincts, perhaps).
Warren wins Iowa because she has a great ground game, the NYT and DMR endorsements matter (lol) and because Bernie softens in the final week of polling. It’s a tough row to hoe, and realistically she’s just hoping for a strong top three. Even then, it’s not going to be a straightforward path.
I don’t know, really? Maybe in a crazy 5-way tie. She did get 13% in Emerson, I guess.
One more note
I’ll be keeping track of how accurate models and markets are this primary season, and I’m going to do a silly wrinkle this time and throw in my own predictions to see how well I fare (I bet I lose). I’ll post my final numbers and the markets’ next Monday, on caucus day, after the final batch of polling is out. Things I’ll be tracking: Brier score (accuracy), calibration, betting strategy (bet-the-favorite, Kelly based on 538, Kelly on me, other models), and how much I actually make trading the way I trade these things to see how it all stacks up.