Romney hoping to regain footing in markets

David Rothschild, Yahoo! News
·Economist

Update, 10:14 p.m. ET: Mitt Romney and Rick Santorum slugged it out tonight in Arizona, but the importance was all about Michigan. Santorum, as the frontrunner in the polls, was on the defensive for most of the night. Romney, as the actual frontrunner, was playing it safe. The strategy paid off for Romney. During the course of the debate, his likelihood of carrying Michigan rose from 66.2 percent, 15 minutes before the debate, to 73.6 percent, at the close of the debate. And, in correlation, Romney's likelihood of gaining the GOP nomination is up over 3 points on the day to 75.7 percent.

Sources: Betfair and Intrade

Since we last convened for a good old Republican debate, Mitt Romney was convalescing from his loss in South Carolina and Newt Gingrich was quickly squandering his momentum. A month later, Romney's onetime death grip on the nomination has slackened, and he now faces a non-negligible threat to the nomination.

The chart shows the progress of the likelihood of gaining the Republican nomination since the morning of the last debate on January 25. The big dip for Romney occurred just after the loss in Colorado and Minnesota.

Sources: Betfair and Intrade

The polls tell a very different story. Santorum continues to sail past Romney and is the clear leader in the polls.

Sources: Real Clear Politics

Most of the recent movement in the race has to do with the ebb and flow of the candidates' fortunes in Michigan. Arizona, the site of tonight's debate, is secure for Romney with an 87.1 percent likelihood of victory. But, Romney is just 67.0 percent likely to carry his father's home state of Michigan, and is down in the polls there. A double win on Tuesday could do a great deal to re-inflate his curve.

David Rothschild is an economist at Yahoo! Research. He has a Ph.D. in applied economics from the Wharton School of Business at the University of Pennsylvania. His dissertation is in creating aggregated forecasts from individual-level information. Follow him on Twitter @DavMicRot and email him at thesignal@yahoo-inc.com.