Open Access Open Access  Restricted Access Subscription or Fee Access

HOW PREDICTION MARKETS HELP US UNDERSTAND EVENTS` IMPACT ON THE VOTE IN US PRESIDENTIAL ELECTIONS

Sveinung Arnesen

Abstract


In this paper we argue that pre-election polls and prediction markets reflect two different processes which, by analyzing them together, can help us understand if and how key events which occur during an election campaign influence the final outcome. While polls can be seen as reflecting the voters’ enlightening process towards realizing their vote preferences, prediction markets have this process incorporated into their prediction. We study the movements of weekly poll ratings and IEM market predictions and measure the impact selected events have on these in the run-up to the US 2004 and 2008 presidential elections. We conclude that the Swift Boat ad campaign in 2004 was an enlightening event which moved poll ratings in favor of President Bush, towards the level the IEM market had predicted already before the Swift Boat event. The financial crisis in 2008, on the other hand, was an enlightened event. It came as news to both market traders and poll respondents, sealing the victory for Obama.

The paper has previously been presented at the Third International Conference on Prediction and Information Markets, April 3-5 2011, Nottingham Business School.


Full Text:

PDF

References


Abramowitz, Alan I. 2008. "Forecasting the 2008 Presidential Election with the Time-for-Change Model." PS: Political Science & Politics 41:691-5.

Beck, Nathaniel, Simon Jackman, and Howard Rosenthal. 2006. "Presidential Approval: the case of George W. Bush." Working paper.

Berg, Joyce, Robert Forsythe, Forrest Nelson, and Thomas Rietz. 2001. "Results from a Dozen Years of Election Futures Markets Research." In Handbook of Experimental Economic Results. Amsterdam: Elsevier.

Berg, Joyce, Forrest Nelson, and Thomas Rietz. 2003. Accuracy and Forecast Standard Error of Prediction Markets. Working Draft, Henry B. Tippie College of Business and Administration, University of Iowa, Iowa City.

———. 2008. "Prediction Market Accuracy in the Long Run." International Journal of Forecasting 24:285-300.

Buchanan, William. 1986. "Election Predictions: An Empirical Assessment." The Public Opinion Quarterly 50:222-7.

Caesar, James W., and Andrew E. Busch. 2005. Red Over Blue: The 2004 Elections and American Politics. Oxford: Rownman & Littlefield.

Caesar, James W., Andrew E. Busch, and John J. Jr. Pitney. 2009. Epic journey: the 2008 elections and American politics: Rowman & Littlefield Publishers, Inc.

Campbell, Angus, Philip E. Converse, Warren E. Miller, and Donald E. Stokes. 1966. "Elections and the Political Order." New York: John Wiley & Sons, Inc.

Campbell, James E. 2005. "The fundamentals in US presidential elections: Public opinion, the economy and incumbency in the 2004 presidential election." Journal of Elections, Public Opinion & Parties 15 (1):73-83.

Crespi, Irving. 1988. Pre-election Polling: Sources of Accuracy and Error: Russell Sage Foundation.

Croves, Robert M. 1989. Survey Errors and Survey Costs. New York: Wiley.

Erikson, Robert S., and Christopher Wlezien. 2008. "Leading Economic Indicators, The Polls, and the Presidential Vote." PS: Political Science & Politics 41:703-9.

Fair, Ray C. 2002. Predicting Presidential Elections and Other Things. Stanford, CA: Stanford University Press.

Gelman, Andrew, and Gary King. 1993. "Why Are American Presidential Election Campaign Polls so Variable When Votes are so Predictable?" British Journal of Political Science 23 (1):409-51.

Hibbs, Douglas A. 2000. "Bread and Peace voting in U.S. presidential elections." Public Choice 104:149-80.

Holbrook, Thomas. 1996. Do Campaigns Matter?: Sage Publications.

———. 2008. "Incumbency, National Conditions, and the 2008 Presidential Election." PS: Political Science & Politics 41:709-13.

Kou, Steven G., and Michael E. Sobel. 2004. "Forecasting the Vote: A Theoretical Comparison of Election Markets and Public Opinion Polls." Political Analysis 12:277-95.

Lewis-Beck, Michael, and Mary Stegmaier. 2000. "Economic Determinants of Electoral Outcomes." Annual Review of Political Science 3:183-219.

Malhotra, Neil, and Eric Snowberg. 2011. "The 2008 Presidential Primaries through the lens of Prediction Markets."

Shaw, Daron R., and Brian E. Roberts. 2000. "Campaign Events, the Media and the Prospect of Victory: The 1992 and 1996 US Presidential Elections." British Journal of Political Science 30:259-89.

Traugott, Michael W. 2001. "Assessing Poll Performance in the 2000 Campaign." Public Opinion Quarterly 65:389-419.

Tufte, Edward. 1978. Political Control of the Economy. New Jersey: Princeton University Press.

Wlezien, Christopher, and Robert S. Erikson. 2002. "The Timeline of Presidential Election Campaigns." Journal of Politics 64:969-93.

Worcester, Robert. 1996. "Political Polling: 95% Expertise and 5% Luck." Journal of the Royal Statistical Society 159 (1):5-20.




DOI: https://doi.org/10.5750/jpm.v5i3.492

Refbacks

  • There are currently no refbacks.