Competing Approaches to Forecasting Elections: Economic Models, Opinion Polling and Prediction Markets

Andrew Leigh and Justin Wolfers

No 502, CEPR Discussion Papers from Centre for Economic Policy Research, Research School of Economics, Australian National University

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: Voting; elections; prediction markets; opinion polling; macroeconomic voting (search for similar items in EconPapers)
JEL-codes: D72 D84 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2005-11
New Economics Papers: this item is included in nep-for and nep-pol
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Competing Approaches to Forecasting Elections: Economic Models, Opinion Polling and Prediction Markets (2006)
Working Paper: Competing Approaches to Forecasting Elections: Economic Models, Opinion Polling and Prediction Markets (2006)
Working Paper: Competing Approaches to Forecasting Elections: Economic Models, Opinion Polling and Prediction Markets (2006)
Working Paper: Competing Approaches to Forecasting Elections: Economic Models, Opinion Polling and Prediction Markets (2006)
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