ACE

I spent yesterday at the Australian Conference of Economists, aptly* held at the University of Melbourne. In a session organised by Tim Fry and Sinclair Davidson, Sinclair presented a paper of theirs on trust and the 2004 election, and I presented a paper by Justin Wolfers and myself on election forecasting. It was a terrific chance to catch up with Justin and his partner Betsey, who’d flown in from Philadelphia, and to say g’day to John Quiggin (who I can confirm that is looking as fit and hirsute as always). Regular readers of the blog are probably heartily sick of election forecasting, but in case you’re not, we got a bit of coverage in the Age and AFR (over the fold).

The conference goes on today and Wednesday, but I’m teaching tomorrow afternoon, so have returned to the berra for that. On Thursday, I’ll be back on the road, speaking at the ANZSOG schools conference in Sydney and the HILDA conference in Melbourne.

* Aptly, since I think of "ACE" as a very Melbourne term of approval.

Election results: the bookies know best

Cherelle Murphy
AFR, 26 September 2005

Polls are useless in predicting the outcomes of Australian elections but it would appear the bookies are on the money.

Economists Andrew Leigh from the Australian National University and Justin Wolfers from the University of Pennsylvania examined last October’s national election to determine which methods best predicted its outcome.

Their research, to be presented today at the Economic Society of Australia’s Annual Conference of Economists in Melbourne, showed betting markets predicted not only that John Howard would win with an increased majority, but also foresaw outcomes in three-quarters of the marginal seats.

Analysing data from Centrebet, International All Sports, Sporting Bet and SportsAcumen, Mr Wolfers found that the bookies’ data responded quickly to campaign news as well as outside factors such as the Jakarta bombing in the 2004 campaign.

"These data also suggest that the Labor’s Tasmania forestry announcement provided the coalition with a substantial boost," their research said. The polls on the other hand, were extremely volatile and should be used with caution, the authors said.

Using the polls published by ACNielsen, Galaxy, Roy Morgan and Newspoll, the academics found their predictive power to be very low, often favouring a Labor Party win.

Betting markets suggested the likelihood of a coalition win varied only from 54 per cent to 77 per cent, but the polls predictions of a coalition win during the campaign swung widely between 0.7 per cent and 98.3 per cent over the six-week period.

"The most striking aspect of this figure is the extreme volatility of the implied probability of a coalition victory suggested by the polls."

Dr Leigh and Dr Wolfers also analysed the models that try to predict election results based on economic robustness. They found these also predicted a Howard win.

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5 Responses to ACE

  1. guambatstew says:

    I’m not sure that this has much help in electoral prediction, but this (below) just came to my email this morning and you seem the type that MIGHT have interest. If not, that’s why God, I mean Bill Gates, gave us the delete button.

    Cheers, Guambat Stew

    “The Silence of the Scams
    Psychological Resistance to Facing Election Fraud”

    http://www.walterzeichner.com/perlman.html

  2. Sinclair Davidson says:

    ACE was a bit ordinary this year. We have better lunches at out internal seminar series.
    Seriously, though, the elections session was lively and enjoyable. Importantly, the AGE article Andrew links to was prominantly displayed on the front page of the Business section. The only other ACE mention we could find in the AGE was a page 3 (business section) write up of James Galbraiths plenary session. So ACE brought out (at huge expense) a big name, only to be pipped by some locals. I’m happy to report that I have heard some grumbling about this. (ACE brought out a number of left-leaning big names, at huge expense, no doubt explaining the high cost and the low quality catering).

  3. Andrew Leigh says:

    Gumbat, the problem with that article is it assumes the US exit polls were right, and ignores the internal inquiry the media outlets conducted to look at why they stuffed up. Having spent awhile looking at Australian polls recently, I can’t envisage a situation in which I’d go to court, holding a poll up against an AEC figure.

  4. SInclair Davidson says:

    Stephen Kirchner is saying ACE was good this year. It be fair, the Wednesday program did look good – but I could only attend Monday. On that day, the only sessions I wanted to see, apart from Andrew, were on at the same time (one of them clashed exactly with Andrew and myself).

  5. Andrew, thanks for reminding me the conference was on this week.

    Quite impressive that Australia’s three most prominent econobloggers all gave papers. I have posted about you, Stephen and John on http://newconomist.blogs.com

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