10/17/2012 09:41 am ET Updated Dec 17, 2012

Romney Loses Debate, But Will It Matter?

When even a CNN poll, composed of a sample of debate watchers the pollsters freely admit to be 8 percent more Republican than the country as a whole, hands the debate to President Obama by 7 percentage points, you know that Governor Romney has taken something of a beating. The win was also recorded by CNN's focus group of undecided voters in Ohio, and was confirmed by the consensus of other instant polling, notably from SurveyUSA, Battleground, CBS News, Google Consumer Surveys and Public Policy Polling (PPP). The most interesting of these polls is perhaps the PPP survey of independents watching the debate in the swing state of Colorado. By 58 percent to 36 percent, these voters named Obama the winner.

Those who prefer to track the debate through the online betting markets, such as Betfair and Intrade, saw things no differently, as a flood of money came for the president through the course of the debate. Betfair traders piled their money into backing the re-election of the president, while Intrade ran a market exclusively on who would win the debate, deferring to the CNN instant poll as the final arbiter. The latter market started out marginally favouring Mr. Obama but soon attracted a growing tide of support for the incumbent, until by the end of the debate the odds implied a probability of an Obama win of more than 90 percent. Brave traders indeed, trusting to a CNN poll which had already heavily over-sampled Republicans in the vice-presidential debate. Either they were pretty sure that the president had won so handsomely that he could overcome a potential repeat skew, or they were unaware of it. Whatever the reasoning, the market got it right.
According to this evidence, Mitt Romney not only lost the second presidential debate, he was bludgeoned out of it.

But will it make a difference to the election outcome?

For the answer to this we can turn to those all-important fluctuating price lines which represent the probability that one candidate or the other will take the White House.

Interestingly, it was such a price line that signalled, during the first of the UK prime ministerial debates in 2010, the impending disappearance of the Conservative Party's hopes of winning an overall majority in that year's general election. David Cameron's performance in that debate mirrored perceptions of Barack Obama's performance in the first of this year's presidential debates. Cameron's performance in the second debate was substantially better, mirroring again Obama's performance in his second debate.

Does this tell us something? The Conservative leader's first debate flop almost certainly cost his party an overall majority in the House of Commons. His second debate performance helped him to Downing Street at the head of a coalition government. So are there any parallels we can draw for the U.S. election?

In one sense, the parallels are limited because the U.S. presidential election is winner-takes-all. But there is another sense in which a parallel does exist. If we consider control of the Senate and House of Representatives as being in some degree linked to the performance and popularity of the president, what is sometimes called the 'coattail' effect, we might just have witnessed a performance outstanding enough in the context of the two debates to hand the White House and Senate to the Democrats, but perhaps not enough for a full sweep of Congress.

Is this the way it will eventually turn out?

We shall see!