Saturday, October 23, 2010

Introducing the National Pulse Index

In college, we used to play a game called bladderball. The entire university (including grad schools) was divided into four teams, and each started in the corner of an enormous courtyard. A six foot inflatable ball was rolled into the middle and everyone charged. Goal was to push the ball to the opposite corner.
It was incredibly violent, and frequently resulted in injury, which caused the university, as part of their ongoing "No More Fun of Any Kind" campaign, to ban it.

Mostly, the ball didn't move much, because any momentum from one team would cause the other three to defend the threatened corner. The ball would bounce back and forth for a while until, inevitably it suddenly shot in one direction. It was a perfect metaphor for an information cascade.

I've pondered this of late in the context of next week's election. Clearly, over the last year, the political bladderball busted a move for the Republicans. But lately, the media narrative has shifted to the idea that the landscape has tightened, i.e. that Democrats are closing the gap. One or two polls are usually cited as evidence. But is this overall narrative correct?

I used to run a quant hedge fund. What we quants like to do is take lots of data and make sense out of it. So, how to capture the ebb and flow of an election cycle? What I've come up with is a simple metric that I call the National Pulse Index. Essentially, it aggregates polls from everywhere, exploiting the wisdom of crowds. Specifically, it compares each new poll with the previous poll from the same race. Today, for instance, Rasmussen reported that Republican Rick Perry is up by 11 points in the Texas Gubernatorial race. While this may seem like good news for Republicans, the last poll actually had him up by 14. I assign this a "minus 3" for the Republicans.

Each day as new polls come out, they are compared to the previous polls from the same races. The numbers are added up to get a net score for the day. Then, I use a moving average of the last three days to smooth out the data. This gives us a very good picture as to which side has the momentum.

Allow me to make my case for why this works, and then we'll get to the numbers.

1. On any given day, this will capture the aggregate opinions of up to 20,000 people, whereas an individual poll (that might get one side or the other excited) can have as few as 300 people.

2. There really is a national "mood," and it really does matter which way it's moving. Opinions are infectious. It matters in Ohio what people are thinking in Alabama. They may not be perfectly in sync, but they do tend to move in the same direction at the same time. Thus, if Charles Schumer just went from 40 points up to 30 points up, it doesn't mean anything for Schumer - he's still going to win easily - but it does mean the mood in New York is moving in a certain direction. This makes it likely the mood is moving in the same direction elsewhere.

3. Aren't some of these polls partisan and/or sloppy? Absolutely, but my system takes them all, because it evens out. For instance, a poll came out last week in Washington that had Patty Murray up by 15 points, which was a crazy outlier, and resulted in a +18 score for the Democrats. Two days later, though, another poll came out showing Murray only up by 8, which resulted in a -10 score. The bad polls tend to get balanced out. To the extent that they don't, they probably have useful information, which is why one doesn't want to make judgments about which polls to use.

4. What about the Generic Ballot polls, the ones where people are asked whether they intend to vote for a Republican or a Democrat? Don't those show the national pulse? Yes they do, but they don't come out every day, and they survey far fewer people (as few as 700).

With that, is there anything to the "races are tightening" narrative? Well, here are the numbers:

Anything below zero means movement in the direction of Democrats, anything above Republicans. What I see is a lot of back and forth, like prize fighters slugging it out. There doesn't seem to be a clear advantage to either party, but perhaps this feels like progress to Democrats and their media friends after several months of hemorrhaging.  So, as usual, the media has created a narrative out of thin air.

For those interested, I will post an update of this every day between now and the election.

1 comment:

  1. Terrific blog today--I look forward to following the National Pulse Index, particularly in the next ten days.