The bookies odds have been gradually moving in favour of a ‘No’ vote. I explained how these odds are calculated here. My latest estimates, which are described in this post, reflect the odds taken up to 12 noon on 6th August 2014 so they reflect the immediate reaction to the STV referendum debate on the evening of the 5th August 2014.
My response to the debate is described here. Mr Salmond and the Yes campaign did not do substantial damage to Mr Darling and the No campaign. Indeed, on some issues, notably currency, the view is that Mr Darling came off best.
The latest probability of a ‘No’ vote derived from the bookmakers’ odds is shown in Figure 1.
Figure 1: Implied Probability of a ‘No’ Vote Taken from Bookmakers Odds 28th May 2014 to 6th August 2014.
Having been broadly stable during early July, it appeared that the Yes campaign was making headway in the last week of the month and into early August. However the Figure indicates that the immediate response to the debate (the last observation on Figure 1) seems to have been an increase in the probability of a ‘No’ vote. This means that the latest data show that the market expectation is for a more than four in five chance of a victory for the ‘No’ campaign. The probability of a ‘No’ vote, measured on the morning of August 6th, was 82 per cent.
Figure 2 shows the longer term evolution in the probability of the ‘No’ vote since the beginning of October 2013. The ‘Yes’ campaign had its strongest showing in mid-April 2014 which may have coincided with residual resentment arising from Mr Osborne’s refusal to share the pound sterling with an independent Scotland. Since then, the probability of a ‘No’ vote has returned to the same level as in late 2013.
Figure 2: Implied Probability of a ‘No’ Vote Taken from Bookmakers Odds 1st October 2013 to 6th of August 2014.
If these odds are good predictors of the likely outcome, then the ‘Yes’ campaign needs some dramatic intervention between now and the referendum if it is to bring this probability down to 50% (0.5) which would give it an evens chance of a favourable outcome.