Wednesday, June 7, 2017

General election 2017: Opinion Polls vs Betting Markets

Update, June 9: The results are in, and the BBC gives the vote share for each party. Although the polls gave a wide variety of different predictions between different polling companies, the average of the polls appears to have outperformed the betting markets again!

See my recent article in The Conversation for some reasons why betting markets may have been performing so badly in predicting elections and referenda in recent years, or read the original research here


Tomorrow is the polling day in the UK General Election 2017 (make sure you vote!). Today's news will be full of the latest opinion poll numbers, and pundits making predictions. Increasingly people are also looking to betting and prediction markets to get an idea of what is likely to happen as well. Both opinion polls and betting markets have made some very significant errors in recent years. Before the Brexit referendum I did an analysis of what bets on Betfair were telling us about the predicted vote share for Leave/Remain. Punters got that one wrong, just like the election of Trump in the USA, while polls were more accurate in predicting tight races.

Before we go to the polls tomorrow, lets compare what opinion polls and betting markets are telling us, so we can evaluate which is more accurate on this occasion. I'll focus simply on raw vote share for the two main parties (ignoring constituency effects), and I'll use the Financial Times poll-of-polls as a benchmark for the opinion polls and Betfair's vote share markets for betting markets.

First the opinion polls:

This gives a central forecast of Conservatives on 43%, Labour on 37%

To calculate the predicted vote share from Betfair I'll be repeating the analysis I did here (see previous post for R code), fitting a beta-distribution to the vote share divisions given on the market. I've taken screenshots of the Conservative and Labour markets, as these will no doubt change after I post this:



Performing the analysis to get the predicted vote share gives the following results:

This puts the Conservatives on 44% and Labour on 34% - almost identical for the Conservatives as the opinion poll, but somewhat lower for Labour.

Labour have recently surged in the polls from a very low position. It seems that the betting markets don't fully trust this. Come tomorrow night we'll have a good idea which of the polls or the market has been more accurate.