Tuesday, March 27, 2012

Re-Introducing the Electoral Forecasting Model

In 2004, I introduced a model that I built to predict presidential elections. More specifically, it predicts the outcome of the electoral college, which is all that matters, after all. So far, the model has worked out pretty damn well: in 2004, it hit the electoral count on the nose, and in 2008 it got the winner right, missing the actual count by only 21 votes, or roughly the value of an Arizona swinging from one candidate to the other.

The model is built on "prediction markets," like intrade.com, where they have real-world betting on each state's outcome. Betting is continuous, and from it we may infer a real time, state-by-state, probability. I then multiply this probability times the number of electoral votes available in that state for the probablity-weighted outcome. It is understood that one cannot win part of a delegation (excepting Maine and Nebraska), it's all-or-none. Still, for predictive purposes, you don't want to hand 100% of, say, California's electoral votes to Obama just because he has a 95% of winning those votes. You give him 95%. It's effectively a small hedge against something dramatically unexpected happening.

It's time to roll out the 2012 model. Right now, it has Obama winning comfortably, 312 to 226. In 2008, he won 365 to 173.

There are caveats.

First, since the election is eight months out, the data is pretty thin (i.e. the state-by-state markets are very thinly traded right now - some haven't even traded at all, in which case I relied on the closing data from 2008).

Second, when I cited the model's accuracy, what I was really referring to was the last snapshot before each election. During the months-long run-up, there will be plenty of fluctuation, but it will still tend to be the best indicator at any point in time. Obviously, as circumstances change, so does the forecast.

Why does this work better than polls? Because it's real people betting real money, not people answering polls on the phone where their responses could be shaded for any number of reasons.

I will start to graph all this and post more frequent updates as the election draws nearer. Personally, I think the forecast is way, way off, at this point. As you know from my previous post, the math for Obama's re-election is highly problematic. If you agree, you should be placing bets on intrade!

1 comment:

  1. Your model soon could be unneeded.

    The National Popular Vote bill would guarantee the Presidency to the candidate who receives the most popular votes in all 50 states (and DC).

    Every vote, everywhere, would be politically relevant and equal in presidential elections. No more distorting and divisive red and blue state maps. There would no longer be a handful of 'battleground' states where voters and policies are more important than those of the voters in more than 3/4ths of the states that now are just 'spectators' and ignored.

    When the bill is enacted by states possessing a majority of the electoral votes– enough electoral votes to elect a President (270 of 538), all the electoral votes from the enacting states would be awarded to the presidential candidate who receives the most popular votes in all 50 states and DC.

    The bill uses the power given to each state by the Founding Fathers in the Constitution to change how they award their electoral votes for President. Historically, virtually all of the major changes in the method of electing the President, including ending the requirement that only men who owned substantial property could vote and 48 current state-by-state winner-take-all laws, have come about by state legislative action.

    In Gallup polls since 1944, only about 20% of the public has supported the current system of awarding all of a state's electoral votes to the presidential candidate who receives the most votes in each separate state (with about 70% opposed and about 10% undecided). Support for a national popular vote is strong among Republicans, Democrats, and Independent voters, as well as every demographic group in virtually every state surveyed in recent polls in closely divided Battleground states: CO – 68%, FL – 78%, IA 75%, MI – 73%, MO – 70%, NH – 69%, NV – 72%, NM– 76%, NC – 74%, OH – 70%, PA – 78%, VA – 74%, and WI – 71%; in Small states (3 to 5 electoral votes): AK – 70%, DC – 76%, DE – 75%, ID – 77%, ME – 77%, MT – 72%, NE 74%, NH – 69%, NV – 72%, NM – 76%, OK – 81%, RI – 74%, SD – 71%, UT – 70%, VT – 75%, WV – 81%, and WY – 69%; in Southern and Border states: AR – 80%,, KY- 80%, MS – 77%, MO – 70%, NC – 74%, OK – 81%, SC – 71%, TN – 83%, VA – 74%, and WV – 81%; and in other states polled: CA – 70%, CT – 74%, MA – 73%, MN – 75%, NY – 79%, OR – 76%, and WA – 77%. Americans believe that the candidate who receives the most votes should win.

    The bill has passed 31 state legislative chambers in 21 small, medium-small, medium, and large states. The bill has been enacted by 9 jurisdictions possessing 132 electoral votes - 49% of the 270 necessary to bring the law into effect.

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