Sunday, August 06, 2006

Handling the Truth

This is one of those days I wish a thousand people read this blog so I could get a thousand suggestions.

The problem is: Which political prognosticators are the most accurate? Which pundits and/or pollsters are most often correct?

With the rise of the Internet -- and doesn't that phrase sound like something from a George Lucas backstory? -- it has become simplicity itself to aggregate six or a dozen websites to provide an overview, a pulse-taking, of politics in the U.S. But one -- meaning me and maybe you -- is quite naturally drawn to those sites that confirm one's hopes for the future. And that can lead to confusion and disappointment.

I mean that in 2000 and 2004 I spent a lot of time reading pundits and pollsters who gave the most positive view of Democratic prospects. I enjoy a good pep talk, but I don't want to be self-deluded. There is a practical application of having better data. My wife and I don't give vast amounts to our favorite Democrats, but we do give something, and accurate polling/predicting help us direct our contributions.

But the real point is that I do follow the "horse race" aspect of politics, whatever my reason, and I would like to see as clearly as possible -- if only for my own satisfaction -- who's ahead and who's behind as the horses come into the stretch.

This is where I am currently getting my "best guesses" on what will happen in November: Larry Sabato at the University of Virginia and the Cook Report, which shows up in a weekly email. My favorite, however, is the Iowa Electronic Markets website, because of its accuracy and its rationale.

In the IEM, investors put up real money to buy shares in political outcomes. (If you need to know more than that, click through.) The point is that in terms of recent presidential elections, the IEM has been slightly more accurate than the an average of the best-known polls in predicting not just who will win or lose but what the actual vote share will be. As I understand it, the theory is that if a sufficient number of people "buy" shares in a possible political outcome, their collective wisdom is considerable because the act of investing money with the possibility of personal gain, or the simple satisfaction of I-told-you-so, allows them to differentiate between what they want to happen and what they actually think will happen.

I don't fully grasp the implications of this idea, since the Internet stock bust shows that not every financial market operates rationally. But experience suggests that IEM does. It certainly has become one of my favorites. It showed last time that Kerry would lose by very nearly the margin by which he lost. And now the consensus of IEM market investors is that the Dems have a better than 50-50 chance of taking back the house but only a 1-4 shot at taking the Senate.

Any of you readers have a favorite source -- be it Magic Eight Ball or Ouija Board -- when it comes to handicapping future elections? I can handle the truth.

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