Brexit, Trump—the once-reliable prediction markets have misfired of late. Here’s why.
Their consensus on the Brexit referendum and US election was badly wrong. In the latter, 60 out of 61 regular tracking polls forecast a Clinton victory. Prediction seems an expensive parlour game that makes pundits and pollsters richer but no-one wiser. The unpredicted events usher in fresh uncertainty. No-one knows what the consequences of Brexit or the Trump presidency will be.
Cast the net more widely: Is political prediction dead? In one sense, prediction will never die. It is something we cannot not do.
Any deliberate action requires assumptions about effects, responses and consequences. To navigate the present we must try to see ahead. But was political prediction ever good? There is no golden age to look back to. Shocking events, accidents of fate and tectonic shifts are strewn through history. The Cold War, often now contrasted with present disorder, seems stable only in retrospect.
Those four decades were beset by tensions and crises. Almost no-one foresaw the break-up of the Soviet Union. So uncertainty has always been with us. But there does seem to be more of it around now: This may be inevitable in an age of extraordinary social and technological change. But it should worry us for deeper reasons, for good prediction is not only valuable in itself: Of the 35 Senate seats up, Democrats hold 26 and Republicans just nine.
Democrats have to do well just to hold their current overall numbers. The reason for this is found in the previous three elections for this class of Senate seats. In , Democrats gained six seats, and in , they gained four seats. That is history, but how is the current political climate steering the electorate?
Despite strong economic growth real GDP growth of 4. Is this good or bad news for the in-party? Moreover, aside from Presidents George H. Other than the Bushes, every president since the mids has had approval ratings in the low to mid 40s at their first midterm.
The bad news for Republicans is that the parties of each of these four recent non-Bush presidents Jimmy Carter, Ronald Reagan, Bill Clinton, and Barack Obama suffered double-digit House seat losses in their midterms and two lost more than 50 seats Clinton in and Obama in What follows are four independent congressional forecasts that inform us about what we should expect to come out of this election.
Table 1 presents a summary of these congressional forecasts. Although there are differences among them, two points are common. This is likely to be a very good year for the Democrats in the House of Representatives. In fact, all four forecasts expect a Democratic House majority. In the Senate, Republicans are likely to hold their own and perhaps pick up a seat or two. So, on to the forecasts. For more details about the forecasts, see the links at the top of this piece.
The Seats-in-Trouble model of party seat change in national congressional elections both on-year and midterms is a hybrid election forecasting model. It combines the insights and comprehensive assessments of expert election analysts examining in depth the conditions of individual House and Senate contests with a rigorous statistical analysis of historical aggregate data of partisan seat change. The Seats-in-Trouble forecasting equation built from these observations was first used in the House elections.
It has since been modified, tweaked, and extended to Senate elections. The accuracy of its forecasts in its various incarnations has been quite good until , when substantial expected Democratic seat gains failed to materialize. The raw material of seats-in-trouble equation is the pre-election competitiveness ratings of individual district or state races determined by The Cook Political Report since the mids.
The seats-in-trouble index aggregates these individual district or state in application to the Senate ratings to a national measure. The revised index now counts a seat as being in trouble if it is rated as a toss-up or worse for the party currently holding the seat. The index is computed as the net difference in the number of seats in trouble for each party: Democratic seats in trouble minus Republican seats in trouble.
A negative relationship is expected between the number of seats in trouble for a party and the number of seats actually gained by that party. The seats in trouble index is plotted against seat change for Democrats in House and Senate elections in Figures 1 and 2 respectively, and the associated regression equations are presented in Table 1. Ratings around August were not made in and and those elections, therefore, are not included.
Ratings around August were not made in and are, therefore, not included. Standard errors are in parentheses. House estimates are based on elections from , , and from to Data was unavailable for the Senate in The seats in trouble count is from The Cook Political Report in or around mid-August of the election year. As Figure 1 and the table indicate, the index and actual seat changes are strongly related in House elections and the conversion of vulnerable seats to lost seats is greater than one in absolute value.
If there are strong partisan short-term forces developing in an election, August ratings pick up their early signs, but not their full brunt as they build to November.
The Cook Political Report in mid-August rated three House seats held by Democrats and 37 seats held by Republicans as toss-ups or worse. With a toss-up or worse difference of for the Democrats, they are likely to gain about 44 seats.
If this comes to fruition, the next House will have a Democratic majority with about Democrats and Republicans. Based on both in sample and out of sample errors, the odds are very high that the Democrats will emerge from the midterm with control of the House.
The association between Senate seats rated in trouble in August and actual seat change is also strong, though not quite the level of that in the House. The conversion of seats in trouble to Senate seat change is nearly one-to-one. Because Democrats are defending a much larger number of Senate seats than Republicans this year, there are many more Democrats seats that could potentially be in trouble. As of mid-August, Cook rated five of the 26 Senate seats defended by Democrats and three of the nine Senate seats held by Republicans as toss-ups or worse.
With Democrats having two more Senate seats in trouble than Republicans, we should expect Republicans to pick up two more seats, leaving the next Senate with 53 Republicans and 47 Democrats.
Charles Tien and Michael S. Lewis-Beck , Guest Columnists September 13th, We first generate a forecast from our classic structural model. Next, we adjust this forecast on the basis of expert judgments provided in Inside Elections with Nathan L. OLS yields the following results,. To forecast the seat change in the House, we insert the independent variable values: For June , Gonzales reports 68 Republican seats in play, versus 10 Democratic seats in play.