Photos: How Betfair predicts the future

In the hurly burly of politics, pundits and opinion polls are often seen as the best way to predict the outcome of an election, but their work is an inexact science at best. Now, political researchers are using the way people bet to give them a more accurate steer on the outcome of a ballot.

Online betting exchange Betfair has revealed how its customers placed their bets on a number of recent events and how they reflected their eventual outcomes.

The graph here shows the way people were betting on the exchange over the US presidential election, from 1 Jan 2008 to 1 Nov 2008. Obama is in blue and McCain is in red.

A: Obama wins in the state of Iowa, propelling him into the lead for the Democratic nomination. (3 January)

B: Hillary Clinton pulls off a shock win in New Hampshire. (8 January)

C: John McCain secures the Republican nomination after Super Tuesday on 5th February. (5 February)

D: Obama secures his party's nomination following a primary win in North Carolina. (2 May)

E: The 'Palin Bounce' starts a period of recovery for the McCain campaign. (4 September)

F: This rise did not last long. (15 September)

Leighton Vaughan Williams, Professor of Economics and Finance at Nottingham Business School, told silicon.com presidential elections have been predicted by analysing betting behaviour for decades. The only election where the markets were wrong was 1916, when Woodrow Wilson made a surprising last-minute comeback.

Photo credit: Betfair