So, it’s political
convention season… but I can’t help but thinking of Shakespeare, “…it
is a tale / Told by an idiot, full of sound and fury / Signifying nothing.”
Given the health
of the economy, Al Gore is nearly a sure thing to win in November.
In the next few
weeks I will be examining the role of the economy in presidential elections.
This week I will be providing some links to the most popular election prediction
Vote Equation (Ray Fair)
Fair, a professor
at Yale as been prediction presidential elections for over 20 years. His
equation (with assumptions) prediction gives Al Gore 52% of the two party
popular vote. Assumptions: 4% per capita real GDP growth for first 3 quarters,
2% inflation (15 quarter), 9 quarters above 3.2% real per capita GDP.
and Peace Model (Douglas Hibbs)
Hibbs, a professor
at Göteborg University has another equation. Hibbs assumes a 2.1 percent
annual growth rate of per capita real personal disposable income in the
3rd quarter of 2000 and 1.6 percent in the 4th quarter. His model
predicts that Al Gore will get 54.8% of the two-party popular vote.
Forecast from The Dismal Scientist
Rather than forecasting
the popular vote, this model uses data at the state level to predict the
electoral count (using fixed effects). As of July, Gore leads 359 to 179.
This site was
set up (by me) for the 1996 election and compares predictions from several
econometric models including Fair, Hibbs, Tufte and my own specifications.
It uses a Java applet to let you enter the economic conditions and then
see what the models predict.
A market based
approach to “predicting” elections. Use real money to buy “stock” in candidates.
For the presidential election, they have both a winner take all market
as well as a vote share market. They also have markets for control of the
congress as well as others. The current price (as of July 31) indicates
that Gore and Bush are running about even.
Who needs economic
predictions when we have polls? (Well, polls aren’t perfect at predictions,
especially 6 months in advance, take a look at the historical
record, including Dukakis’s 17
point lead in July 1988.)
Want to make some
money? I’d suggest buying Gore in the Iowa market.
but a walking shadow, a poor player
That struts and
frets his hour upon the stage,
And then is heard
no more; it is a tale
Told by an idiot,
full of sound and fury,
– Shakespeare, Macbeth, Act V. Scene V.
gives Gore a lead: Pocketbook issues favor Democrats – CBS MarketWatch.
the Economy, Stupid? – Kiplinger’s
2000 – Christian Science Monitor