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http://ssrn.com/abstract=848946
 
 

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


Andrew Leigh


Australian National University - Economics Program, Research School of Social Sciences

Justin Wolfers


University of Michigan at Ann Arbor - Department of Economics; The Ford School of Public Policy, University of Michigan; The Brookings Institution; National Bureau of Economic Research (NBER); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Kiel Institute for the World Economy

February 2006

ANU Centre Economic Policy Research Discussion Paper No. 502
IZA Discussion Paper No. 1972

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.

Number of Pages in PDF File: 34

Keywords: Voting, elections, prediction markets, opinion polling, macroeconomic voting

JEL Classification: D72, D84

working papers series





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Date posted: November 16, 2005  

Suggested Citation

Leigh, Andrew and Wolfers, Justin, Competing Approaches to Forecasting Elections: Economic Models, Opinion Polling and Prediction Markets (February 2006). ; IZA Discussion Paper No. 1972. Available at SSRN: http://ssrn.com/abstract=848946

Contact Information

Andrew Leigh (Contact Author)
Australian National University - Economics Program, Research School of Social Sciences ( email )
HC Coombs Building
Australian National University
Canberra, Australian Capital Territory 0200
Australia
+61261251374 (Phone)
+61261250182 (Fax)
HOME PAGE: http://econrsss.anu.edu.au/~aleigh/
Justin Wolfers
University of Michigan at Ann Arbor - Department of Economics ( email )
611 Tappan Street
Ann Arbor, MI 48109-1220
United States
734-764-2447 (Phone)
HOME PAGE: http://www.nber.org/~jwolfers
The Ford School of Public Policy, University of Michigan ( email )
735 South State Street, Weill Hall
Ann Arbor, MI 48109
United States
734-615-6846 (Phone)
HOME PAGE: http://www.nber.org/~jwolfers
The Brookings Institution ( email )
1775 Massachusetts Avenue, NW
Washington, DC 20036
United States
HOME PAGE: http://www.nber.org/~jwolfers
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
HOME PAGE: http://www.nber.org/~jwolfers
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
HOME PAGE: http://www.iza.org/en/webcontent/personnel/photos/index_html?key=1737
Centre for Economic Policy Research (CEPR)
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London, EC1V 3PZ
United Kingdom
HOME PAGE: http://www.cepr.org/researchers/details/rschcontact.asp?IDENT=157943
CESifo (Center for Economic Studies and Ifo Institute) ( email )
Poschinger Str. 5
Munich, DE-81679
Germany
Kiel Institute for the World Economy ( email )
P.O. Box 4309
Kiel, D-24100
Germany
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