dissecting the Fetterman-Oz flip in an information market

Fetterman led in the race for election to the U.S. Senate for a long time. Then, Oz overtook Fetterman. How did the Predictit information market track this flip?

This article is my follow-up to my August 2022 essay about uses of information markets in the Pennsylvania U.S. Senate race (Passmore, 2022a).

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In an August 2022 essay in NOTES FROM PITTSBURGH (Passmore, 2022b), I described the use of information markets in place of survey methods for identifying candidate preferences of the electorate. Information markets operate like commodity and financial futures markets, except that the “commodity” traded in a contract is a written proposition, not a physical good. Information markets trade contracts for propositions about whether well-specified events will occur and when.

The basis of an information market is a contract for a written proposition, the truth of which is validated at a specific future date. Contract prices range between zero and $1. The price the buyer of a contract is willing to pay represents the buyer’s belief in the fulfillment of the proposition when the market closes at some future date. Market participants typically buy and sell contracts using an electronic exchange.

In this article, I describe how an information market tracked an abrupt change of fortunes in campaigns run by two candidates for a single seat in the U.S. Senate for Pennsylvania.

Election for U.S. Senator from Pennsylvania: Fetterman & Oz

The Midterms

The 2022 Pennsylvania midterm race for U.S. Senate has garnered national attention (see, e.g., (Glueck, 2022)). The race pits John Fetterman, a Democrat, against Mehmet Oz, a Republican. Fetterman serves as the 34th lieutenant governor of Pennsylvania. A midterm election—so-named because it occurs in the middle of a U.S. president’s four-year term—is held to elect candidates to the U.S. Congress and state and local public offices. The U.S. will hold its next midterm election on 8 November 2022, after a string of primary elections and run-offs narrowed the field of candidates. As I write this article on October 31, 2022, campaigning continues at a fever pitch.

Front-Running Candidates

Fetterman was mayor of Braddock, Pennsylvania, from 2006 to 2019. Oz is a Turkish–American television personality, author, professor emeritus at Columbia University, and retired cardiothoracic surgeon. He is the first Muslim to be nominated by either major political party for U.S. Senate. The outcome of this race could have a profound impact on the balance of power in the U.S. Senate and stands as a test of the efficacy of endorsements for office by former U.S. president Donald Trump.

Initial Preferences: Fetterman Over Oz

As of 18 August 2022, PredictIt (Predictit, 2022), a project of Victoria University located in Wellington, New Zealand, had been running an online information market for 181 days to obtain bets about the outcome of the Fetterman v Oz race (PredictIt, 2022a). My August 2022 essay described the technical details about this information market. However, reported in that essay was the overwhelming and expanding lead that Fetterman, the Democrat, had over Oz, the Republican, as demonstrated in the price-volume plot in Figure 1.

Figure 1: 90-day price-volume plot for “Which party will win the U.S. Senate election
in Pennsylvania in 2022?” in PredictIt political market. on 18 August 2022
(Image from Predictit (2022b).)

Inversion of Preferences: Oz Over Fetterman

The Flip

Shown in the plot in Figure 2, including 90 days prior to 30 October 2022, is the inversion of preferences for Fetterman over Oz to Oz over Fetterman that occurred on 19 October 2022. And, the strength of preference for Oz continued from that day and increased until 30 October 2022.

Figure 2: 90-day price-volume plot for “Which party will win the U.S. Senate election
in Pennsylvania in 2022?” in PredictIt political market. on 30 October 2022
(Image from Predictit (2022b).)

Initial Reaction Leading to the Flip

Fetterman reportedly suffered an ischemic stroke on 31 May 2022 (Avril, 2022). An ischemic stroke involves a blockage in one of the large vessels that supplies oxygenated blood to the brain. Fetterman’s team announced that the stroke had caused no cognitive damage, assured voters that Fetterman would resume campaigning soon, and believed that the episode would not affect preferences for Fetterman over Oz (Terruso & Collins, n.d.). The price-volume plot in Figure 2 seems to demonstrate Fetterman’s hold on the electorate’s preferences, despite lingering questions about his long-term recovery and complications from his stroke.

Things Happened

Interview

Surveys of the electorate began to show a tightening of the race between Fetterman and Oz in October (Drey, 2022). Oz, Fetterman’s opponent, and the public demanded for months greater transparency from Fetterman about his health challenges. A significant event negatively affecting Fetterman’s campaign was an 11 October 2022 interview with NBC News’s Dasha Burns (Fetterman, n.d.), who wrote that Fetterman struggled to speak and “had trouble finding words (Burns & Allen, 2022a).” In addition, Burns said:

We had a monitor set up so that he could read my questions because he still has lingering auditory processing issues as a result of the stroke, which means he has a hard time understanding what he’s hearing. Now, once he reads the question he’s able to understand, you’ll hear he also still has some problems, some challenges with speech.

“Just in some of the small talk prior to the interview, before the closed captioning was up and running, it did seem that he had a hard time understanding our conversation. I’ve spoken with stroke experts, they say folks can fully recover from that, but the caveat that every expert gives is that they can’t fully assess a patient without details on their health records, without that information that the campaign has yet to disclose. We’ve asked multiple times for medical records, we’ve asked for interviews with someone from his medical team, those requests have so far been denied to NBC News and other outlets that have requested this as well.

Medical Report

Burns and Allen (2022b)reported that Democrats stated concerns about Fetterman’s recovery and whether he had been forthcoming about his health. After considerable pressure on the Fetterman campaign, on 15 October 2022 Fetterman’s primary care physician released a letter (Chen, 2022) summarizing his opinion of Fetterman’s condition. Chen wrote:

Overall, the Lt. Governor is recovering well from his stroke….He spoke intelligently without cognitive deficits. His speech was normal and he continues to exhibit symptoms of an auditory processing disorder which can come across as hearing difficulty. Occasional words he will “miss” which seems like he doesn’t hear the word but it is actually not processed properly. His hearing of sound such as music is not affected….He has no work restrictions and can work full duty in public office.

Skeptics pointed out that Dr. Chen was a donor to Fetterman’s campaign, posing a challenge to the standards and integrity of a physician working for the University of Pittsburgh Medical Center (Sabes, 2022).

Debate

On 25 October 2022, Fetterman and Oz met for one hour for their one and only debate (Gomez, 2022). Some journalists complained that the debate amounted to a bullying of Fetterman for the difficulties left by his stroke (Lanum, 2022). Yet, Fetterman’s performance seemed for many to reinforce questions about his stroke recovery. Democrats interviewed after the debate were shocked by the degree to which Fetterman struggled to communicate clearly, even though he has acknowledged the ongoing difficulty processing what he hears and speaking without dropping words (Gomez et al., 2022). One voter interviewed after the debate said

I felt almost bad for John Fetterman. I think there is no question that his social media campaign has been very sharp and good and appealing, but when he got on the debate stage, I couldn’t really understand a lot of the points he was making. On the other side, I thought Oz looked pretty sharp. Sounded like a politician. I don’t know that Fetterman was really able to convey many of his positions on issues. (Kornick, 2022)

The Information Market Tracked the Flip of Preferences

Timing

The Predictit information market for the Fetterman-Oz race reacted to events after Fetterman’s stroke. As displayed in Figure 2, the contract price for Oz spiked upward, and Fetterman’s price dropped after the 11 October 2022 Burns interview with Fetterman. The rose of Oz and the decline of Fetterman continued until 18 October 2022—three days after the Fetterman medical report dropped—when Oz overtook Fetterman. Fetterman and Oz continued to diverge, drawing closer on the day of the debate but moving to a wide, open-jawed lead of Oz over Fetterman starting the day after the debate. Almost 260,000 contracts were traded in this Predictit market on the day of the debate.

Market Movements: Traders Bought Oz and Sold Fetterman

Shown in Figure 3 is a candle plot of the seven days of trading of Oz contracts prior to and including 30 October 2022. One hundred thirty-five thousand contracts were traded in the day of the debate. The price of an Oz share started trading at 53 cents, but closed at 65 cents. The price rose to 68 cents on 30 October 2022.

Figure 3: 7-day price-volume candle plot for “Which party will win the U.S. Senate election
in Pennsylvania in 2022?” in PredictIt political market. on 30 October 2022
(Image from Predictit (2022b).)

The candle plot in Figure 4 shows the precipitous fall in the price of Fetterman contracts. The price of a Fetterman share declined from 50 cents to 39 cents on the day of the Fetterman-Oz debate. After three days of slight declines, the Fetterman price share settled at 38 cents on 30 October. People made up their minds, it seems, right after the debate. On 25 October 2022, 116,000 Fetterman shares were traded, most likely as sales. Then, the next three days saw a small volume of trades.

Figure 4: 7-day price-volume candle plot for “Which party will win the U.S. Senate election
in Pennsylvania in 2022?” in PredictIt political market. on 30 October 2022
(Image from Predictit (2022b).)

Last updated on

[1] "2023-01-06 08:16:59 EST"

My Limits

In this article, I stick with the data from the Predictit market, Which party will win the U.S. Senate election in Pennsylvania in 2022? (PredictIt, 2022b). I do not consider Fetterman’s fitness for office based on his health condition. Also, I do not comment on the ethics of what many observers describe as “ableism” (Bogart & Dunn, 2019) enacted by Oz’s supporters to denigrate Fetterman’s fitness for office.

Your Comments & Corrections

To make comments about this posting or to suggest changes or corrections, send email to David Passmore, send a direct message on Twitter at @DLPPassmore, or send an IMsg or SMS to dlp@psu.edu.

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