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These prices are all bonkers! For example Betting markets are giving Biden a 50% chance of winning the nomination if he completes his term. I'm going to lay out Biden's route to the 2024 Presidency as follows:
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1/ Probability of completing his term 2/ Probability of being nominee, conditional on completing his term 3/ Probability of winning, conditional on being nominee
The reasons for leaving were: death (natural causes (4) / assassination (4)), resignation (1). We can tighten up the base rates here by considering these three causes together and estimating more accurately for the modern day.
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That said, it might be a good estimate for the chance that his health is in good enough shape to run again.
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Joe Biden's risk of assassination. There haven't been any successful assassinations since the 60s, and I struggle to see the odds of this going above 1%.
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Resignation. I don't have a good way to tighten up the base rate here, so let's call it 1/67 ~ 1.5%. Other. Laplace's rule of succession puts this at ~1.5% too.
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So let's call the probability of Biden's term ending early or with him unable to run again as ~23-25%.
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Base rate for nomination Of (elected) first term presidents who were able to be nominated, 5 failed or chose not to run. (Although none in the 20th or 21st centuries). This gives us a base rate of 5/28 ~ 18% for not being nominating or 82% for being nominated.
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Combining this with his chances of being able to be nominated we get: ~62%. (Considerably higher than the 30% being quoted by ). If we assume his chances of making it to the end of the term are as given by , we get ~50%. (Still higher than 's nominee p).
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Base rate for winning the election: Of (elected) first term presidents who were nominated, 6 failed to win (first time). This gives us a base rate of 16/22 ~ 73% chance of Biden winning in 2024 (if he runs).
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Combining this with our earlier forecasts, this gives a 45% chance of him winning in 2024 ( puts this at 20%). If we adjust for his nomination odds on , this gives him a 22% chance of winning.
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What have we learnt from this? Most of the difference of opinion is coming from whether he's nominated if he completes his term (82% base rate vs 50% being implied by and ).
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Some difference is coming from whether or not he completes his term (75% base rate vs 60% on ) There is another small difference coming from whether or not he wins if he runs again (73% vs 65% implied by ).
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Having considered the base rates, we should consider the inside view. (How does Biden compare to the replacement president)
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Will Biden complete his term (inside view)? I have no special insight here beyond my adjustments made in the base rates section. I'm sticking with 75% he can run for the nomination if he wants to.
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(If anything I think this is a little low, but I'm already so far above the market I have to pay it a little respect).
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Will Biden win renomination if he completes his term (inside view)? I think yes. Many of the Presidents who chose not to run for re-nomination were: a. In the 1800s b. Had already made commitments not to run
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Biden on the other hand follows in long unbroken streak of renominated sitting Presidents. He's also said he plans on running again. His age is the only factor which might bring our estimate down, but I believe that's mostly accounted for in his term completion chances.
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Plenty of Senators are older than him (16% of the current Senate!). I adjust our base rate probability from 82% to 85%.
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Will Biden win the election if nominated? Here recent history (Trump, Bush Snr) has demonstrated that sitting Presidents aren't quite locks for re-election. On top of that, Presidential elections are notoriously close. I'm adjusting down from 73% to ~62.5%. ~Inline w/ markets
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Isn't 3 years a long time to hold this bet? Yes. Normally I hate bets where you tie up cash for this long. I'm making an exception here. I think this bet should perform well in the interim. The odds should drift higher as he continues to be President.
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The downside risk is small in the interim: it's unlikely he's going to announce that he's not running to avoid becoming a lame duck, so most of the risk is actuarial. We're getting to sell some extremely expensive insurance.
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It's a fantastic bet. At some point the market is going to realise this and adjust. I don't want to miss that.
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Having a position in this market will give you the opportunity to trade around in what is going to be the biggest prediction market market in the next four years. Some skin in the game will help focus the mind.
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Biden has dementia, Biden is old, Biden sucks, Biden ... I suspect most people with this opinion couldn't understand why the odds of Trump completing his presidency were so low, and spent most of the previous election cycle looking at clips of Biden gaffes.
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I thought these stories would die after the election and everyone lost a load of $, but apparently not..
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