Those of us who take forecasting seriously will have despaired at the spurious, post-Brexit soothsaying being offered by both sides of the campaign. We’d rather try to make sense of the deeply contradictory evidence presenting itself ahead of the crucial 23rd June referendum.
Last Monday the almanis market moved sharply in favour of a “Remain” vote. The move was, rather pleasingly, followed in the subsequent days by the betting markets. Consensus, such as there is, across most platforms now seems to put the “Remain” camp’s chances at around 79%. This is odd, given that there are still polls coming out with “Leave” in front. I wrote about this discrepancy here.
Personally, I think 79% is about right (perhaps a little high but not by much) which means I have nothing valuable to say on the matter from a forecasting perspective. Instead I want to give some room to professional economist and almanis forecaster Jakob Steffen who sees things rather differently and from a refreshing, outsider’s perspective. In reply to my suggestions that the pundits are right to ascribe such high chances of a “Remain” vote, he said:
“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.”
Staying Ahead of the News:
If you want misinformation and drivel, read anything a politician has said on the subject in any arm of the UK’s mainstream media. Finding actual insight requires accessing the right people directly.
For cool-headed analysis from people who really take the forecasting game seriously, head to politicalbetting.com where Mike Smithson has, over many years, developed a remarkable community of experts and enthusiasts in UK election forecasting. Also, my current favourite provider of professional analysis is Number Cruncher Politics.
A word of warning though. The success of the Trump campaign has confounded US analysts, including the mighty Nate Silver, and there have been some similarities observed in the Brexit campaign over here. Could the boffins be wrong again? There are plenty of experts who agree with Jakob’s contrary opinions.