TY  - JOUR
AU  - Leigh,Andrew
AU  - Wolfers,Justin
TI  - Competing Approaches to Forecasting Elections: Economic Models, Opinion Polling and Prediction Markets
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 12053
PY  - 2006
Y2  - February 2006
UR  - http://www.nber.org/papers/w12053
L1  - http://www.nber.org/papers/w12053.pdf
N1  - Author contact info:
Andrew Leigh
Economics Division, RSSS
Australian National University
ACT 0200, Australia
Tel: 011 612 6125 1374
Fax: 011 612 6125 0182
E-Mail: andrew.leigh@anu.edu.au

Justin Wolfers
Business and Public Policy Department
Wharton School, University of Pennsylvania
3620 Locust Walk
Room 1456 Steinberg-Deitrich Hall
Philadelphia, PA 19104-6372
Tel: (215) 898-3013
Fax: (215) 898-7635
E-Mail: jwolfers@wharton.upenn.edu
AB  - 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.
ER  -