Calculating favourites

[MathBabe]

I was reading Lee Jones' "Winning Low-Limit Hold'em" on the weekend, and got stumped by one of the statements.

He says, paraphrased, "consider the situation where you have AKs and your opponent has 78o. You are a 2:1 favourite before the flop".

I buy that AKs is a far better hand than 78o, but how does he calculate the 2:1? He doesn't give any justification or explanation of how the odds are calculated. I have a math degree, so I should be able to figure out a way to quantify this, but I'm not sure how he's getting that exact ratio.

I'd like to understand the general rule for figuring out which hand is a favourite over another. Is it the number of outs you each have? The number of flops or boards that give you a hand?

MathBabe