29 October, 2003: Superior tram

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Nick Barlow is running a sweepstake on the results of today's Conservative Party confidence vote. (You can also see the bets which have been placed.) I thought I'd enter, just for fun. Of course, I don't actually know anything about the inner workings of the Conservative Party, but rather than guessing blind I looked up the price that spread betting outfit IG Index are quoting (or, rather, their IG Sport subsidiary).

(This is a common approach to predicting the future which is oddly compelling -- to the naive. The argument is that if you want to predict some variable x in the future, you invent a security which will pay off according to the future value of x. Establish a market in this security, so that its current price is y. Now people who believe that x will be larger than y have an incentive to buy the security, increasing y. Those who believe that x will be smaller than y will sell their holdings, or perhaps sell the security short, if the market is sufficiently sophisticated. In equilibrium, y = x, so y can be used to predict x. This is fine if the traders in the market actually know about the future value of the variable x. If they don't, all bets are off. Spread betting is a fairly pure implementation of this idea; the `spread' is the difference between the selling and buying prices of the security and is there to ensure that the bookie makes a profit; DARPA's ill-fated Policy Analysis Market was another example, intended to predict acts of terrorism. I have no idea how effective the spread betting market will be in predicting the outcome of the Conservative Party's vote. In particular, to be accurate, members of the Party or their close confidants would have to be participating in the market, since they're the only people with the relevant information. Anyway....)

Last night, IG Index was offering a spread of 61--66 votes in favour of keeping Mr. Duncan Smith. This morning the spread was 55--60 -- i.e., overnight, their customers' opinion of his chances had declined. I thought it would be quite fun to monitor the price IG were offering and see how it changed during the day. Here's the plot, up to around 14:45 this afternoon: (note that I've only plotted the spread when it changed)

Spread of votes for IDS

Sadly, at around 14:45 today, the market for this even was removed from the IG Sport web site. Indeed, for a time, their entire web site was offline; now, a request for the prices -- linked to from their front page -- gives,

The information you have requested is not currently available. Please try again later.

Those who are adept at spotting conspiracy theories may recall that IG's chairman, Stuart Wheeler, is a major donor to the Conservative Party... who also might like to claim some credit for triggering the confidence vote. Equally, it could just be a web site fuckup. I note that Blue Square, originally the fixed-odds arm of IG, are still offering odds on various possibilities for a new Tory leader. Of course, Blue Square aren't part of IG any more.

In other news, William Hill have been intermittently withdrawing their bets on the same set of hypothetical leadership contenders. Their slate for the leadership disappeared completely this afternoon. Betting doesn't seem to have been very active, and I note that the odds differ markedly between Blue Square and William Hill:

Leadership candidate odds

(I should also say that, although there's a temptation among those who have no ambition to see the Conservative Party form a future government to regard its present tribulations as a source of cheap entertainment, it would be a little sad if internal injuries left the party unable to oppose any of the offensive things that our Dear Leader proposes for the next Parliament. Equally, the idea of Michael Howard as Prime Minister fills me with horror, which makes the second of the above plots slightly concerning. I gather that, should Mr. Duncan Smith lose the confidence vote, we should expect to see some sort of stitch-up among the leading contenders so that the vote will not have to be put to the entire membership, a process which might paralyse the party for months. Ho-hum.)

Copyright (c) 2003 Chris Lightfoot; available under a Creative Commons License.