Factors that Influence Presidential Elections
A Time-Series Analysis of the Factors that Influence Presidential Elections
A number of papers have argued that the prices listed on Intrade for presidential election futures contracts can be interpreted as the probability that a candidate will be elected president in an upcoming election (Wolfers & Zitzewitz 2004, 2006). This paper uses this premise as a foundation for analyzing the economic and non-economic factors that drive outcomes in presidential elections. The idea that economic factors drive presidential elections has a long history in economic research (Fair 1978). However, in the absence of real-time, observable variation in the probability that a candidate is elected, much of the justification for this proposition has either been theoretical or predicated on the notion that since economic factors effectively predict presidential outcomes such factors must have a direct impact on election outcomes. The idea that non-economic factors like voter sentiment drive election outcomes most likely dates back to the invention of Democracy. However, it seems that most often the relationship between non-economic factors and outcomes is presumed rather than based on any sort of rigorous analysis. Despite the fact that Intrade has existed for the 2004, 2008, and 2012 American elections it seems that no one has yet to use the real-time variation in Intrade prices to assess the factors that drive presidential election outcomes. The purpose of this paper is to demonstrate an initial attempt perform such an analysis.