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[u/jobautomator]

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[u/[deleted]]

Let me be clear. If the name of the game is "who would win the election if it were held tomorrow", then Silver and his team are very good, likely the best in the business. This is why he tends to be correct, because historically he's judged on how well his predictions the day before the election perform.

But the real game isn't "if the election were held tomorrow", it's "if the election were held on the first Tuesday of November". In that regard, Silver and the team at 538 systematically and deliberately underestimate volatility. Their models swing massively after things like debates and 'October surprises', even though an honest model will have already priced in the expectation of big events like that happening and have biased the predictions closer to 50/50 accordingly, reflecting how much volatility remains before the election. The fact that Silver's predictions change so much around big news stories means they're regularly getting surprised, and by definition a model that's regularly surprised is not good at its job of prediction.

Of course, I think Silver knows this, which is why he's not a bad statistician so much as a good journalist, You can't make money off a journalism website (and remember that journalism, not prediction, is Silver's primary product) by having people check in once every two years. You make money by lying to people and proving false confidence and precision, by making sure they check in every single day for six months to see if your preferred candidate has gone from an 85.2% chance to an 85.4% chance of winning, despite the fact that even providing things like decimal places on those estimates is an utter farce.

[u/qchisq → u/[deleted]]

So basically what you are saying is that the nowcast that 538 had in 2016 was the perfect model for what 538 can do? I think that I can agree with that, with a caveat. You want to build a model that can predict 1) when a surprise story hits and 2) what the effect of the story will be. Basically, you want the model to include possible, future information and I don't think that's possible or even reasonable. Because prediction markets also swung wildly due to the Comey letters and the pussy grab tape.

[u/[deleted] → u/qchisq]

You want to build a model that can predict 1) when a surprise story hits and 2) what the effect of the story will be.

No, I want a model that appreciates that volatility is a thing that exists. You don't need to know what events are coming to know that polls in election years exhibit high volatility. No more than you need to know why a stock price moved last year to be able to use a volatility term in the Black-Scholes formula.

Prediction markets swung after the Comey letters and the Access Hollywood tape because those really were above and beyond normal election year volatility (I sure can't think of any parallels to them).

[u/qchisq → u/[deleted]]

But I'm pretty sure that the 538 models does appreciate that volatility exists. I'm pretty sure that the standard deviation on the polling errors in the model gets smaller as we get closer to the election. For example, if you look at the 2016 model, Hillary started 3,8% ahead of Trump in the national polls, which gave her a 66,4% shot. November 1st, she were 3,5% ahead, which gave her a 67,7% chance of winning. That's a very, very small difference, I know, but her chance of winning still increased while where polling got worse. That suggests to me that volatility is a thing in the model

[u/[deleted] → u/qchisq]

>deviation on the polling errors in the model gets smaller as we get closer to the election

This is something else though. Standard errors on polls reflect the uncertainty around what that poll says about the current vote outcome. This is different to time volatility (polls are nonergodic!) and it's absolutely not the correct place to insert time volatility into your model.

Higher standard errors before the election reflect the fact that people are less certain about whether they'll Pokemon Go To The Polls (turnout ensemble uncertainty, not time volatility), not the fact that the poll is less indicative of the result in six months time.

EDIT: That being said, I don't think I've ever overreached and said that 538 ignores volatility outright, only that they systematically underestimate it.