An Election Economics Post-Mortem
Paul Solman: Here’s an email I received from Yale economist Ray Fair, whose presidential prediction model we featured on the site a few weeks ago:
Ray Fair: The vote equation did well in predicting the 2008 election. The following chart lists the nine predictions that were made from November 1, 2006, through October 30, 2008. The most important prediction from the point of view of judging the vote equation is the last one, which uses the actual economic values (actual as of October 30, 2008). The two-party vote was 53.0 percent for Obama and 47.0 percent for McCain.
Nine Predictions from the Vote Equation: (Remembering that a negative number for each means a position number for the non-incumbant party — i.e., the Democrats)
|Nov. 1, 2006||53.5—46.5||1.8||3.6||1|
|Jan. 31, 2007||53.4—46.6||1.7||3.4||1|
|Apr. 27, 2007||53.2—46.8||1.9||3.3||1|
|July 27, 2007||52.0—48.0||2.2||3.5||2|
|Oct. 31, 2007||51.9—48.1||2.2||3.3||2|
|Jan. 31, 2008||52.0—48.0||1.8||3.1||2|
|Apr. 30, 2008||52.2—47.8||1.5||3.0||2|
|July 31, 2008||51.5—48.5||1.0||3.0||3|
|Oct. 30, 2008||51.9—48.1||0.22||2.88||3|
Ray Fair: One feature of the predictions is that they did not change much across time. On July 27, 2007, the NIPA data revisions led to one more good news quarter, as did the July 31, 2008, data revisions. Other things being equal, each additional good news quarter leads to an increase in the incumbent (Republican) vote share of 1.075 percentage points. The predictions for the Republicans varied from 46.5 to 48.5 across this two-year period.
Another feature of the predictions is that they are all fairly accurate. The errors are well within the standard error of the equation of 2.5. In the final analysis the error was 1.1. In general, even two years before the election the equation was giving a fairly accurate view of the election outcome.
You can find the website for the vote equation here.
Paul Solman: What’s so striking to me is that, if you take the economic model seriously, McCain was pretty much doomed from the get-go, and the Palin Factor was actually not a factor at all, one way or the other. While Fair points out that if it were a factor, his model wouldn’t capture it, but it looks like as the economy worsened, so did the Republicans’ chances of winning an election, regardless of who those Republicans happened to be.
Meanwhile, over at the Internet betting markets, which we chronicled in a piece in 2004, it was much the same story.
At InTrade, based in Dublin, Ireland, except for a week or so in early-mid Sept. when the Palin factor DID seem to make a difference, the odds of Barack Obama winning never dipped below 50 percent. On the Iowa Electronic Market (University of Iowa), another real money market, you could bet on both the winner and the total vote share. The Democrats were better than 50-50 to win the presidency starting in 2006 and had soared since early Sept. The vote share betting hovered around the actual result – 53-47 – for the entire past two years.
Finally, this email from Princeton political science professor Larry Bartels, who was featured in the 2004 story linked to above. Bartels is looking ahead to Obama’s chances in 2012 and reflecting on how much they will hinge on economics:
Larry Bartels: In 1936 [President Roosevelt’s second campaign], state-level shifts in FDR’s electoral support seemed to hinge critically on how much income grew in each state in 1936 (not 1934 or 1935). Meanwhile, people in other parts of the world happily embraced Socialist, Liberal, Conservative, Nationalist, funny-money radio preacher, and Nazi approaches if they happened to be in power when things got better.
Paul Solman: Bartels’ recent book, Unequal Democracy, is well worth looking at. I found his account of the death/estate tax and traditional American antipathy to it especially surprising.