Betting and Elections
The winner of yesterday’s election was … statistics.
While bloviating pundits went on and on about how close the election was going to be, some people actually used statistics to forecast the outcome. Perhaps the most famous election quant is Nate Silver. (I’ll be writing more about Nate Silver in a few weeks when I write a post about his book, the signal and the noise. Despite my admiration for Silver, I think he is a bit confused about the difference between Bayesian and frequentist inference. He is a raving frequentist, parading as a Bayesian, as I’ll explain in a few weeks.)
Silver uses all the available polls together with other background information, and then applies statistical methods to combine the information and make predictions. Over at Simply Statistics, there is a nice plot, which I reproduce here:
The plot shows the voting percentage versus Silver’s prediction. Pretty impressive. Of course, Silver wasn’t the only one using statistical methods to make election predictions. See the Washington Post for some more.
Silver caused some controversy when he responded to criticisms of his predictions by offering to bet. Margaret Sullivan, the New York times ombudsman (or, ombudswoman, I guess) criticized Silver for offering the bet. But as Alex Tabarrok argued, offering to bet is a good idea. As Tabarrok puts it:
“A Bet is a Tax on Bullshit”
(This is one of my favorite quotes of the year.) Tabarrok goes on to say: “In fact, the NYTimes should require that Silver, and other pundits, bet their beliefs.”
I agree with this. Imagine if every pundit had to bet part of their salary every time they made a prediction.
I would go a step further and say that every politician should have to put their money where their mouth is. After all, most public policy consists of bets made with other people’s money. If the president thinks that investing in Solyndra is a good bet, then he should have to put up some of his own money.
Betting is a great test of one’s beliefs. I applaud Nate Silver for standing behind his predictions with the offer of a bet. We need more of that.
Edit: My colleague Andrew Thomas has a nice post about this: see