Working Paper: NBER ID: w12053
Authors: Andrew Leigh; Justin Wolfers
Abstract: We review the efficacy of three approaches to forecasting elections: econometric models that project outcomes on the basis of the state of the economy; public opinion polls; and election betting (prediction markets). We assess the efficacy of each in light of the 2004 Australian election. This election is particularly interesting both because of innovations in each forecasting technology, and also because the increased majority achieved by the Coalition surprised most pundits. While the evidence for economic voting has historically been weak for Australia, the 2004 election suggests an increasingly important role for these models. The performance of polls was quite uneven, and predictions both across pollsters, and through time, vary too much to be particularly useful. Betting markets provide an interesting contrast, and a slew of data from various betting agencies suggests a more reasonable degree of volatility, and useful forecasting performance both throughout the election cycle and across individual electorates.
Keywords: No keywords provided
JEL Codes: D72; D84
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| economic conditions (E66) | election outcomes (K16) |
| economic models (E10) | forecasts (G17) |
| betting markets (G10) | predictions (F17) |
| betting markets (G10) | political developments (O17) |
| betting markets (G10) | stability of forecasts (C53) |
| polling results (D72) | accuracy (C52) |
| polling volatility (C54) | voter sentiment (D72) |