Friday, July 30, 2004

Election Forecasts

A wise colleague once remarked that, "multiple regression is an admission of deafeat." Many social scientists are much more optimistic. Among these is Ray Fair, whose "Predictions, Presidential Elections and Other Things" is reviewed in today's WSJ, and who has been honing his presidential prediction models for some time.

Getting a favorable major national book review at this time of year is not bad. The review also highlights Fair's model for predicting the likelihood of extra-marital adventures.

While many forecasters' work can get lost in a sea of projections (e.g., quarterly GDP, CPI, etc.), Fair's work stands out because he goes where many fear to tread.

Right now, the Ray Fair prediction for the 2004 election is at odds with the value of election contracts available at the Iowa electronic market. Fair's model says Bush while the candidates' contracts are now dead even.

Looks like another buying opportunity.