Predictions

We Don’t Know What’s Going On

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Last November (2007) conventional wisdom held that the Democrats held a lock on the next presidential election and that Hillary Clinton held a lock on the Democratic nomination. However, by February (2008), a mere three months later, Obama came from out of nowhere and seized the lead. By July (2008) Obama had won the Democratic convention and most people seemed assured that he would easily win the general election. Then McCain picked Palin a month later and suddenly McCain stands either tied with Obama or slightly ahead. 

Why didn’t all the thousands of professional political analysts in the media, think tanks, political groups and academia predict the impact someone like Palin would have on the election? Why do we keep paying these people or even listening to them?

Face it, for all that we all, amateurs and professionals alike, pontificate on politics, none of us really understand what drives elections or can predict how they will turn out. We don’t know what’s going on. 

[Thoughts inspired by this post via Instapundit]

“The Palin Effect in the Intrade Presidential Election Futures Market”

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Arthur De Vany:

At the Tools Page on Mathestate.com, Dr. Bob Rimmer analyzes the price data in the elections futures market. It is very sophisticated modeling, using stable distributions to forecast the probability of winning for McCain and for Obama.
 
The raw data show the Palin Effect in the dramatic turn around in the futures prices with McCain trailing for many months and Obama leading. In early September there is a sudden reversal. Politics, like life, is dominated by extreme events which only a heavy tailed distribution can capture. None of the other election models are capable of capturing these extreme events. They are far too static and tame. The polls only partly capture the Palin Effect. It is real and dramatic.

(Via John Lott.)

UPDATE:

black swan

Singing W’s Praises

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Steve H. is in great form with his latest post. I mostly agree with him. Bush screwed a lot of things up, wouldn’t fire incompetents and can’t communicate worth a damn. But on the main issue of our day he showed vision, courage and resolve at a time when anything less would have been disastrous. I doubt that either Gore, Kerry or Bill Clinton would have done nearly as well, and I suspect that Bush will eventually be seen by Americans in a much more positive light than is currently the case.

UPDATE: Ginny points out Glenn and Helen’s interview with Doug Feith, which is probably worth listening to.

UPDATE 2: A commenter points out The Diplomad’s excellent post on this topic. I read it several days ago, it probably influenced me and I should have credited it.

Discussing the Elections

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Transcript of an email exchange between Lex and me (edited to remove off-topic remarks):

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Lex:
Interesting day yesterday. I was hoping it would be a blowout for McCain and Obama so Hillary would be out and we could start getting ready for the general election. Instead, much remains open.

Obama had a good day though, he is very much in the race. He got Hispanic votes, contra some predictions. He may yet take down Hillary. Fingers crossed.

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“The Perfect Storm”

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A fascinating post by Wretchard on the dynamics of public events in the Internet age, and on the ways in which such events are now subject to quantitative analysis of the type that has previously been reserved for quantum systems and securities markets:

Internet storms are emergent events which are difficult to predict. They are like rogue waves on the ocean, arising from the complex interaction between many factors, none in themselves particularly threatening. Yet combined they can suddenly throw up a devastating phenomenon, able to sweep all before it. About all people can do to gain a semblance of influence over emergent events is to shorten their reaction times to events. In the jargon of the trade they must increase the speed of their feedback loops to have any hope of evading the avalanche or deflecting it decisively. Because there is no easy way to predict what direction emergent events will take, the prudent manager must do all he can to detect them while they are building up. A number of methodologies exist to do this. But perhaps the most simple consists of an analyst trained to look at prediction markets, aggregators and sentiment analysis software in ways designed to detect the edge of the storm.

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