Possums Pollytics

Politics, elections and piffle plinking

US Election – Post convention polling and market chaos.

Posted by Possum Comitatus on September 8, 2008

Now that the conventions are over we have chaos in the markets as the Democrat polling bounce starts to fade and the Republican bounce goes into full swing.

First up, our usual weekly update:

On the week by week changes in the projected Electoral College votes given by the Intrade state markets, as well as the expected ECV value (where the probability of the Democrats winning each state is multiplied by the electoral votes of that state, then all 50 contests summed) we get:

Just click to expand charts

The current win probabilities by State, as well as the change over the last week in those State probabilities have seen a surge to the Dems over the 7 days:

Moving on to the 100,000 trial simulation results – the State markets have diverged sharply from the headline “Democrat as President” market. For new US readers, you might want to go and have a look at the bottom of the US Election Page to see the methodology of the simulation, as well as exactly what all these charts mean if you’re interested.

For the raw sim results we have:

This is currently showing that the State markets give the probability of a Democrat victory at 62.7%, yet the headline market is showing a probability of a “Democrat as President” of 57.3% as can be seen below.

That is quite a sharp divergence. Our sim market has been a leading indicator thus far of the headline market, but we’ve never had a divergence this large before – so it will be interesting to see if the State markets are overcooking themselves, or the headline market is running with the newstraders over the convention and Palin hype.

Our simulated Electoral College votes and Electoral Map come in as:

But let’s have a closer look at what went on in the markets and polls over the last week, by looking at 5 days worth of movements for the last 7 days.

The yellow area represents the change from the weekly measurement, to the almost daily measurement of the markets. The Palin announcement sent the Democrat Electoral College vote projections sharply upwards in the State markets. Yet if we look at the probabilities and run them with the daily Gallup tracking poll results (where the Gallup data is dated on the day it was in play in the press rather than when the poll was actually taken) we get:

The headline “Democrat as President” market didn’t much care for the Democrat Convention, didn’t believe the polling bounce yet has continued to move strongly and consistently to the Republicans throughout last week.

The Dem polling bounce has now finally deflated, yet the State markets have priced the Palin announcement as a big negative for Republican chances of victory, moving nearly instantly on the news of Palin’s win in the Republican Veepstakes. The States pulled back slightly on the 4th September, but then moved again toward the Democrats yesterday.

We can see it clearly in the behaviour of the Electoral College vote allocations as well:

The States along with their electoral votes moved towards the Democrats, but the headline Intrade probability moved sharply Republican.

We have disequilibrium – you’d think something will have to give over the next week or so since arbitrage opportunities like this aren’t sustainable.

Basically – the headline market thinks the Palin choice and the Republican Convention were great for Republican chances of victory in November, and didn’t think the Democrat convention was worth a hill of beans in terms of generating electoral support.

But the States, the actual Electoral College vote market thought exactly the opposite, that the Palin announcement and the Republican Convention were negatives and still are.

One is wrong – the question is which?

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13 Responses to “US Election – Post convention polling and market chaos.”

  1. David Gould said

    Possum

    I think that the headline markets are more likely to be accurate here. We have had limited to none state polling. Now, I know that people have more knowledge than just the polling. But a lot of that knowledge would already be factored in to the state markets.

    The changes in the state markets would therefore have to respond to changes in information. We have two sets of information here: the polling and the individual reactions to the conventions/Palin pick.

    The individual reactions are, as we have seen in the media, heavily polarised. Thus, we can expect wild swings.

    But the tracking polling is a little steadier and the bounces out of the conventions were expected to some degree, with high expectations for Obama and low ones for McCain.

    The new information that would, imo, be more reliable as to the state of the race – not predicting the result, mind you, but simply the current snapshot – are the national tracking polls.

    And the Intrade headline figure seems to be following those, if you take into account the imbalance in expectations.

    In the long run, though, I think the states will be better predictors. But this chaos is largely driven on people’s feelings, with no other data to back it up.

    Anyway, that is my opinion, for what it is worth.

    David

  2. susan said

    The real issue is not how well Obama or McCain might do in the closely divided battleground states, but that we shouldn’t have battleground states and spectator states in the first place. Every vote in every state should be politically relevant in a presidential election. And, every vote should be equal. We should have a national popular vote for President in which the White House goes to the candidate who gets the most popular votes in all 50 states.

    The National Popular Vote bill would guarantee the Presidency to the candidate who receives the most popular votes in all 50 states (and DC). The bill would take effect only when enacted, in identical form, by states possessing a majority of the electoral vote — that is, enough electoral votes to elect a President (270 of 538). When the bill comes into effect, all the electoral votes from those states would be awarded to the presidential candidate who receives the most popular votes in all 50 states (and DC).

    Because of state-by-state enacted rules for winner-take-all awarding of their electoral votes, recent candidates with limited funds have concentrated their attention on a handful of closely divided “battleground” states. In 2004 two-thirds of the visits and money were focused in just six states; 88% on 9 states, and 99% of the money went to just 16 states. Two-thirds of the states and people have been merely spectators to the presidential election.

    Another shortcoming of the current system is that a candidate can win the Presidency without winning the most popular votes nationwide.

    The National Popular Vote bill has passed 21 state legislative chambers, including one house in Arkansas, Colorado, Maine, North Carolina, and Washington, and both houses in California, Hawaii, Illinois, New Jersey, Maryland, Massachusetts, Rhode Island, and Vermont. The bill has been enacted by Hawaii, Illinois, New Jersey, and Maryland. These four states possess 50 electoral votes– 19% of the 270 necessary to bring the law into effect.

    See http://www.NationalPopularVote.com

  3. KeepingALidOnIt said

    I am finding some good sense (and only one post a day!) at http://campaigndiaries.com/ . This is what this blogger says, which may be relevant:

    “In other words, the electoral college situation seems largely unmoved after the two conventions, and there is much less movement in the key battlegrounds than in national polls. This is certainly not inexplicable: While veepstakes and convention coverage happens in a vacuum in states like Maryland or Texas (thus amplifying its impact), it is largely drowned by an army of volunteers and millions worth of ads in states like Ohio and Virginia.”

    It is hard to believe that entire states are neglected because they are so firmly Red or Blue that $$ spent there is wasted. But the scale of things is so different in the US, that I am struggling to come to grips.

    Anyway, it appears the “information” upon which national markets (and indeed international observers) are basing their bets is different to the information upon which state-based punters are basing their assessments. It seems logical to me that the sum of the state-based assessments is more reliable than the national one.

    But I believe the national assessments play a part in producing the “momentum”, the perception of increasing success, which seems to be important to the parties themselves and how they get the courage to get up and keep working for the next 60 days. Here, of course, we like our pollies to paint themselves as underdogs, and preferably only for 6 weeks at a time at most.

  4. Julie said

    The impact of headlines pushing McCain at this stage of the election cycle must impact on voting intentions. If different conmmunication techniques are effective this impact may be mitigated for the Democrats but the impact of an attractive unknown woman feeding into the celebrity culture will be strong for the Republicans.

  5. michael said

    Great overview!
    Very interesting with the projection element.
    To keep up with the polls I use a interactive widget that shows the election polls by strength of states.
    In addition to other different graphical visualizations of data, this one displays the progression of votes over time.

    It gives a great overview and it is updated as the polls come in!

    http://www.youcalc.com/apps/1218019592041

    … and its easy to put on your blog!

    It will be cool so see how the polls progress in relation to you projections:-)

    Make a difference, keep on voting!

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