Historical presidential betting markets
Open accessAbstract
This paper analyzes the large and often well-organized markets for betting on U.S. presidential elections that operated between 1868 and 1940. Four main points are addressed. First, we show that the market did a remarkable job forecasting elections in an era before scientific polling. Second, the market was fairly efficient, despite the limited information of participants and active attempts to manipulate the odds. Third, we argue political betting markets disappeared largely because of the rise of scientific polls and the increasing availability of other forms of gambling. Finally, we discuss lessons this experience provides for the present.
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Based on contemporaneous prediction market odds, even in the weeks before the 1944 election there was a 25% chance that Dewey would win the presidency.
“Based on contemporaneous prediction market odds (Rhode and Strumpf (2004)), even in the weeks before the election there was a 25% chance that Dewey would win the presidency.”
From The arsenal of democracy: Production and politics during WWII (2018) · cites this paper as Rhode and Strumpf (2004)
The “Predictive Power of the ‘Wall Street Betting Odds’” section analyzes elections through 1940, but does not give odds for Dewey in 1944. Searches for Dewey, 1944, and a 25% election probability found no passage in our copy establishing the claimed figure or timing; page numbers were unavailable. (LLM, conf=0.77)
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Cites
Efficient capital markets: A review of theory and empirical work
Fama, E. F. (1970) · The Journal of Finance · doi:10.2307/2325486 · Cited by 13,635 · see citing works
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Research works printed but not linked: 6
- Camerer, Colin. 1998. "Can Asset Markets be Manipulated? A Field Experiment with Race- track Betting." Journal of Political Economy. 106:3, pp. 457-82.
- Forsythe, Robert, Thomas Palfrey and Charles Plott. 1982. "Asset Valuation in an Ex- perimental Market." Econometrica. 50:3, pp. 537- 68.
- Gilliams, E. Leslie. 1901. "Election Bets in America." Strand Magazine. 21, pp. 185-91.
- Plott, Charles and Shyam Sunder. 1988. "Ra- tional Expectations and the Aggregation of Di- verse Information in Laboratory Security Mar- kets." Econometrica. 56:5, pp. 1085-118.
- Rhode, Paul and Koleman Strumpf. 2004. "Historical Prediction Markets: Wagering on Presidential Elections." Working paper. Roll, Richard. 1984. "Orange Juice and Weather." American Economic Review. 74:5, pp. 861-80.
- Thaler, Richard and William Ziemba. 1988. "Parimutuel Betting Markets: Racetracks and Lotteries." Journal of Economic Perspectives. Spring, 2:2, pp. 161-74.
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Combining forecasts: An application to elections
Graefe, A., Armstrong, J. S., Jones, R. J., & Cuzán, A. G. (2014) · International Journal of Forecasting · doi:10.1016/j.ijforecast.2013.02.005 · Cited by 160 · see citing works
Are betting returns a useful measure of accuracy in (sports) forecasting?
Wunderlich, F., & Memmert, D. (2020) · International Journal of Forecasting · doi:10.1016/j.ijforecast.2019.08.009 · Cited by 18 · see citing works
The arsenal of democracy: Production and politics during WWII
Rhode, P. W., Snyder, Jr., & Strumpf, K. (2018) · Journal of Public Economics · doi:10.1016/j.jpubeco.2018.08.010 · Cited by 14 · see citing works
Self-citation
- Authors
- Rhode, P. W., & Strumpf, K. S.
- Affiliations
- University of North Carolina at Chapel Hill (US)
- ORCID
- Rhode, Paul W
- Venue
- Journal of Economic Perspectives
- Publisher
- American Economic Association
- Published
- 2004-05-01
- Volume
- 18
- Issue
- 2
- Pages
- 127-142
- ISSN
- 0895-3309 (ISSN-L)
- OpenAlex
- W1984606044
- Cited by
- 228
- References
- 1
- Citations by year
- 2026: 11 · 2025: 9 · 2024: 3 · 2023: 6 · 2022: 7 · 2021: 5 · 2020: 7 · 2019: 6 · 2018: 14 · 2017: 9 · 2016: 10 · 2015: 13 · 2014: 16 · 2013: 13 · 2012: 15
- FWCI
- 21.45
- Type
- journal article
- Language
- en
- Open access
- green
- doi.org
- Locations
- The Journal of Economic Perspectives (publishedVersion)
- Carolina Digital Repository (University of North Carolina at Chapel Hill) (submittedVersion)
- RePEc: Research Papers in Economics (submittedVersion)
- UNC Libraries
- Topics
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Sports Analytics and Performance
- Social Sciences › Economics, Econometrics and Finance › Economics and Econometrics › Game Theory and Voting Systems
- Social Sciences › Political Science and International Relations › Electoral Systems and Political Participation
- Keywords
- election forecasting, market efficiency, gambling, US presidential election
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