brexit

The almanis Brexit market has moved sharply towards “Remain” over the past day-or-so, now assigning it around an 80% likelihood. That’s even punchier than Betfair whose odds are showing a 72% implied probability. But why are forecasters showing such confidence in a “Remain” victory in the face of fairly equivocal polling evidence. Here are two very good reasons.

The common theme though is that a referendum is not like a normal election and we shouldn’t read polls in the normal fashion. In elections, people tend to know how they’ll vote and how they voted last time. Polling is therefore a fairly simple matter of putting together a representative sample and asking the right questions – they got the first bit wrong in last year’s general election though. In this referendum, far more people will remain undecided and have no comparable voting history. That makes it all a bit more tricky and we need to dig a little deeper to get at the truth.

Exhibit 1: Pay closer attention to the phone polls, not the online polls
Both the “Leave” and “Remain” camps have had polling leads reported over the past couple of months (summarised here). Those polls are neatly split: those conducted by phone have tended to show big “Remain” leads while those carried out online have suggested “Leave” has its nose out in front. A paper published by Matt Singh of Number Cruncher Politics and James Kanagasooriam of Populous suggests that it is the phone polls we should be listening to.

Phone pollsters, it seems, are far more able to tempt undecided voters off the fence, something they are able to do because they are actually engaged in a conversation with them. These undecided voters are just as likely to vote as those with clearer views so their opinions matter just as much but they’re only captured by phone pollsters. It seems that, when pushed, they have a strong tendency to fall into the Remain camp.

Exhibit 2: Pay closer attention to people’s vote expectations, not their voting intentions
While phone pollsters can delve a little deeper into the uncertain minds of voters than their online cousins, there are other ways to entice a richer assessment. Most people have a pretty good idea of how they’re going to vote, and how a good number of their friends and colleagues will vote too. If you ask someone which way they expect the referendum to turn out, you effectively throw your net across the whole group and derive a broader analysis.

But so much for theory. David Rothschild and Justin Wolfers of the Brookings Institute published a paper back in 2012 which included some actual analysis. This showed, fairly conclusively, that you’re better off predicting outcomes of narrow races using voter expectations than voter intentions. They looked at US state presidential elections between 1958-2008 and found that, where expectations and intentions predicted different outcomes, the expectations were correct in 78% of cases.

As luck would have it, ORB International have been asking for both intentions and expectations and the results are below. The difference is stark.

Table

Note also that Ladbrokes, the UK bookie, has reported 90% of the money staked on the referendum in the past month has been on “Remain”. That’s another powerful indication of expectations.

2 comments

  1. Jakob J. Steffen, J.S. Research

    Although I’d like to agree wholeheartedly with you, Chris, I deplorably can’t. You’re right highlighting the bookies’ odds as well as the remarkable, systematic gap between voting intentions and expectations – however, both were totally misleading in last year’s general election when even the Prime Minister certainly was surprised by the outright majority for the Tories. My point is this: As long as the government does not manage to match the Leave campaign’s emotional appeal, it is rather likely that as much as many people last year didn’t chose to reveal they were actually going to vote Conservative, they do not own up to silently preferring getting rid of continental interference this time round, too. The bookies’ odds, however, strictly follow the expectations element, rather than the real voting intention. Thus, both indicators, in my view, dramatically overstate the probability of Brexit averted. My research outfit still calculates a Brexit risk of roughly 55%, mainly due to the – influential – cabinet Brexiteers’ better PR than that of the PM and his team, the craftiness of the former on remarkable display during President Obama’s recent visit to the UK. It does not help, too, that the Labour party under its somewhat unenthusiastic leader makes no more than a lacklustre effort against Brexit, an important element in our calculations.

    • Chris Clark

      Very interesting Jakob thanks. It’s interesting how you focus on emotional appeal. David Cameron and the “Remain” campaign are focusing on fear rather than hope – which is almost certainly wise given how few people in the UK positively identify with Brussels. There are elections where hope is the big thing (Obama 2008 being the best example) and those where fear presides (the UK election last year was certainly one of those). Currently the media narrative is almost completely dominated by fear, and primarily economic fear – Remain saying Brexit will be a disaster and Leave saying it won’t be that bad. It will be interesting to see if Boris and his chums can make the emotional connection below the radar.

      Labour are terrified of further alienating their working-class base which is being badly damaged by UKIP and won’t be stepping up their campaign. This is a narrative playing out across continents. The progressive, internationalist left is losing the blue collar vote who see globalisation and immigration as a threat to their livelihood.

      Finally, of some interest given that the Phone/Online poll gap has widened since I wrote this post, it is interesting that a similar gap is being seen with Trump in the US. Nate Cohn in the New York Times today has an interesting take. He says that primary results so far suggest that the phone polls have been significantly more accurate: http://www.nytimes.com/2016/05/18/upshot/is-traditional-polling-underselling-donald-trumps-true-strength.html?ref=topics&_r=0

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