Not Political
Hey, Kids!
This is going to be an article about the recent US election that is not about politics. I’m sure you’re all relieved – I know I am.
One staple of any US (or Canadian) election is pre-election polling. Media organizations do it, the parties and candidates do it if they can afford it, and movements in those polls are written about endlessly in the months leading up to the election. It might even be true that they matter for the outcome, because they affect people’s beliefs about the eventual likely outcome, and there is credible evidence that the expected closeness of an election affects people’s decisions to vote. Why bother if you expect a landslide?
This last US election was predicted by almost all polls to be close at every moment, but there were differences, and one notable difference was in the predictions made by traditional polls relative to those made by prediction markets. These market platforms, like Polymarket, allow people to make real-money bets on who will win the election. The price of betting on a Trump win is set on this market platform, based on what bets are being made, and varies between .01$ and 1$. Paying the going price at any moment gives you one ‘share’ in a Trump victory, which means that if he wins, as he did, you collect $1 for each share you bought. Similarly for shares in Harris, which trades on its own separate market (although prices on the two markets are obviously linked). Thus, if a share in Trump costs 40cents, that suggests that in this market the general belief is that Trump is more likely to lose than win, while if his shares are going for 65cents, as they were at various times a week or so before the election on Polymarket, that suggests the general view is that he is more likely to win. Those who bought Trump shares when the price hit $0.65 (see below) made $0.35 for each share they bought.
Polls, on the other hand, do not directly predict the winner, but rather try to predict the share of votes each candidate will get, both nationally and in each state, based on surveys of likely voters. Those state vote predictions then have implications for the Electoral College vote count, which can of course be used to generate a prediction about who will win.
Below is the plaform Fivethirtyeight‘s final poll from Election Day.
Well, here are some facts (so far as I can tell) about all these predictions and polls in this election.
1, All the polls I know about got the national popular vote wrong. Not by a lot, maybe, but the ones that I know about predicted that however the Electoral College turned out, Harris would win the popular vote. They’re still counting votes in California for some reason, but it looks like Trump’s national vote total will exceed Harris’s by maybe 3 or 4 million.
2. None of the polls I saw at any point predicted that Trump would sweep the swing states of Pennsylvania, Michigan, Georgia, Nevada and Wisconsin.
3. If this makes you want to thumb your nose at polls generally, you should probably pick on the one that appears in – wait for it – The Economist. On Election Day – yes, you read that right – it posted an update to its prediction about the winner, giving Harris a 56 percent probability of victory.
Gonna be hard to live that one down……
4, There is plenty of chatter out there in the mainstream media now that the polls, like those in The Economist, are done for, having had their collective asses kicked by the political betting markets. That’s unwarranted, for sure. If you want to go full geek you can read a blog post here by statistician Andrew Gelman as to why that is an unwarranted conclusion, but know that Gelman was involved in putting together the prediction model used by The Economist. (I don’t believe he is involved in its day-to-day operation, so is likely innocent of any involvement in that big Harris jump on Election Day.)
However, I think I will back Gelman on this. First of all, it is worth noting that the betting markets back in 2016 were predicting a Clinton victory right up to election night, by which I mean a Clinton share cost more than $0.50 and a Trump share cost less than that. Beyond that, it is important to note that all US presidential elections in this century have been quite close, some of them really really close. It has become a 50/50 country at the national level politically, so predicting election outcomes is always going to be done with a great deal of uncertainty. That’s what makes sporting contests between equally capable teams fun, right? Whether that fun translates into politics you can judge for yourself.
All of which brings me to one particular prediction market in which something a bit unusual happened this year. I think it’s an interesting story in its own right. A couple of weeks before the election, the prediction market Polymarket, which had been selling Trump and Harris shares for prices not far from $0.50 for some time, suddenly saw the price of a Trump share vault into the middle 0.60s.
It turned out, and Polymarket was pretty up front about this, that the price had increased so markedly because a large buyer – later know as ‘The Trump Whale’ – had jumped in and bought a lot, as in millions of dollars worth, of Trump shares. It’s called a market because that’s what it is, that’s how it’s designed, so his big buy pushed the price of a Trump share up markedly.
It is still not known who this is, and Polymarket sure isn’t going to say, but The Wall Street Journal has featured a couple of stories on him, in which he has said he has no political agenda, but rather that he had a ‘hunch’ that Trump was going to win, that the polls were missing something. [It appears now to be common knowledge that he is a wealthy Frenchman who goes by the alias ‘Theo’. The WSJ claims he is set to rake in some $50 million from his election bets.] He bet not only that Trump would win the presidency, but also that he would win the national popular vote, something no poll got right.
The latest version of his story is that he believed that the polls were once again missing a ‘shy-Trump-voter’ effect, as they did in 2016 and 2020. That is, people who are going to vote for Trump, but won’t tell a pollster that, or just don’t respond to polls. The WSJ story continues as follows –
To solve this problem, Théo argued that pollsters should use what are known as neighbor polls that ask respondents which candidates they expect their neighbors to support. The idea is that people might not want to reveal their own preferences, but will indirectly reveal them when asked to guess who their neighbors plan to vote for.
Théo cited a handful of publicly released polls conducted in September using the neighbor method alongside the traditional method. These polls showed Harris’s support was several percentage points lower when respondents were asked who their neighbors would vote for, compared with the result that came from directly asking which candidate they supported.
Well, now – that’s an interesting idea. If you think so, too, Gelman has an entire post devoted to it, not completely geeky, but very long, which you can read here. Bottom line: he also thinks ‘ask about your neighbors’ polling is an interesting (although not entirely new) idea, but needs more research. Of course he does, Gelman’s an academic, remember.
It is by now well-recognized by pollsters themselves that getting truly representative samples of people to survey has become more difficult with the demise of the universal use of landline telephones. What that all means for the polling business going forward remains to be seen, for sure, but it seems at least true that after three Trump-involved elections, US pollsters have still not figured out how to stop underestimating his support.