• Since the final presidential debate, 15 polls have surveyed voter opinion in Ohio, the state that is more likely than any other to determine the election. President Barack Obama leads former Gov. Mitt Romney in 13 of them. The candidates tied in one, and Romney leads in one. Those last two polls were both conducted by Rasmussen, one of the more right-leaning polling institutions, as FiveThirtyEight's Nate Silver has documented.

    No one is saying Ohio is a walk for the president. The Huffington Post's Pollster and the RealClearPolitics average both have Obama leading with 51.2 percent among those who express a preference for either major candidate. There is still time for a shift toward Romney, and it's always possible that there is a systematic bias in the polls.

    But I don't think it's likely. Historically, polls have been pretty accurate this close to the election. Based only on these surveys, the Signal gives Obama a 75 percent chance of victory in Ohio. When we factor in prediction markets, that figure ticks up a small amount, to 77 percent.

    Read More »from All eyes on—where else?—Ohio
  • Last year, the Signal noticed an eerie correspondence between the highs and lows of the S&P 500 stock market index and the ups and downs of President Barack Obama's odds of winning re-election in the prediction markets. Almost a year later, the two data sets continue to move in remarkable lockstep.

    S&P and Obama reelection odds

    As thorny correlation issues go, this one is particularly interesting because the phantom hand of causation could move in either direction (or in neither, of course). Consider these various interpretations:

    Scenario A: Happy investors lead directly to positive sentiment for the incumbent president. In fact, Matt Lampert, a research fellow at the Socionomics Institute, pointed me to a 1999 study by pioneering market psychologist Robert Prechter (and one-time co-contributor of mine) investigating how soaring markets favor sitting presidents, an observation that Lampert says goes "all the way back to George Washington." Prediction market traders who subscribe to Scenario A will bid up shares for Obama during a bull run in stocks.

    Scenario B: Both signals are a factor of the same force: the greater economy. An improving economy simultaneously bolsters both the profits of companies and the prospects for Obama.

    Scenario C: Elections don't follow stocks; stocks follow elections. The next president may cut capital gains taxes, reduce tax credits for oil companies or impose tighter regulations on banks. The next president may toss the solar industry money to burn, or choke off support for wind power. From media consolidation to antitrust policies, the party in the White House makes a difference for individual companies and corporate America overall.

    The truth is, all three scenarios coexist. Scenario B may be the strongest, but Scenario C is especially intriguing because it would give us clear and direct information about how investors view and react to White House policy.

    But can we disentangle all these forces and isolate exactly how much America's choice on Nov. 6 will affect the stock market? Sure, but it would require running an experiment that only an economist could love. To do so, we would need to abolish the election entirely and institute a coin flip instead: Heads, former Gov. Mitt Romney is president, tails, Obama keeps his job.

    Under this crazy proposal, the instant reaction of Wall Street after the outcome of the ultimate coin flip (Heads? Buy Exxon Mobil.) could be attributed precisely to the identity of the commander in chief and not any other confounding factor. It's the same principle of randomized trials that we use to evaluate pharmaceutical drugs.

    Such an experiment is scientifically valid, but I'm guessing you're not wild about it.

    Read More »from ‘It’s the president, stupid’: Elections drive the economy, too
  • One would think that Gallup, Pew, Rasmussen, every sufficiently wealthy news organization and anyone else interested in conducting a poll would be familiar with the basics of the American electoral system. Why they all insist on continuing to waste precious ink on national polls, then, is completely mystifying.

    Gallup's latest poll of registered voters reports that former Gov. Mitt Romney and President Barack Obama are tied nationally, 48 to 48 percent. Gallup's latest poll of likely voters, based on a complex set of assumptions about voter turnout, has Romney leading Obama by 5 percentage points, 51 to 46.

    These figures are based on a national sample, so they theoretically include voters from Ohio, Florida and Virginia. They also include voters from Wyoming, California, Alabama, Delaware and about 40 other states whose voters could not possibly be any less relevant to the outcome on Nov. 6.

    At this stage in the election, like any sufficiently close election, the fate of the candidates rests with fewer than a half-dozen states. The continuing snapshots of national polls are useful for pollsters and academics, who are interested in things like expected vote share or the probability of victory in the national popular vote. Most stakeholders care only about the likelihood of victory in the Electoral College, and a national poll is not very useful at this point.

    This is why most prognosticators consider Obama to have a far higher chance of victory than the national polls would suggest. The Signal has Obama at a 65 percent chance of victory, while Nate Silver gives him a 75 percent chance against Romney. A small, demented chorus of observers has recently dinged Silver for this conclusion, citing various gut feelings to the contrary.

    Odds of Obama victory vs. polls

    Sources: Betfair, Intrade, IEM, HuffPost's Pollster and RealClearPolitics

    Read More »from National polls are meaningless at this stage in the election


(177 Stories)

About The Signal

The Signal is the Yahoo! News predictions blog featuring real-time forecasts and sentiment on politics, economics, and more. MEET THE TEAM: David Pennock, David Rothschild



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