With less than two months to go before BC’s provincial election the latest shows poll 32 per cent of BC voters support the NDP, 27 per cent support the Liberal party, 10 per cent for the Greens, and 2 per cent for the Conservatives with 23 per cent undecided.
But how much stock should we be putting in these types of polls?
One UBC professor has another answer: let the markets decide.
LISTEN: Banking on victory through the UBC electoral stock market
Werner Antweiler is a professor of economics at UBC’s Sauder School of Business, and the man behind the school’s election Prediction Markets.
Antweiler says the markets can be effective because they’re asking a very different question than opinion polls.
“Which is: Who are you going to vote for in the next election? Whereas a market asks something like ‘who do you think is going to win? And make your best guess about where the election is heading.”
In that sense, he says they work more like a stock market or commodities futures market – aggregating a large amount of information from different people with their own knowledge.
Antweiler says the initiative, which has been running in its current form since 2013, is in large part a teaching tool.
“We want to educate people in how to participate in a market, how to take long and short positions, as well as get people interested in politics. People who participate in a market really have to pay close attention to what’s happening in the political scene and see how the swings in the popular vote translate to seats in the legislature.”
But he says there’s definitely a money element, with potential for canny investors to profit off of under or over-valued positions.
The Prediction Market’s 1990’s era predecessor, the UBC Election Stock Market has proven itself to be more accurate than public opinion polls in a number of instances.
But the model, like any real market, is based on human decisions and isn’t always right.
Case in point, Antweiler says the Prediction Market missed in 2013 when many traders were closely following polls that turned out to be wrong.
“But some traders took contrarian positions – and these traders made quite a lot of money because they bought shares in the BC Liberals at quite a low price, and made a significant gain,” he says.
“One of the big questions this year is will the markets predict something else than the polls. Because in previous instances we’ve seen polls not being right on target.”
Antweiler says it’s early days yet, but so far the Liberals have a slight edge, trading at 60¢ to the NDP’s 51¢ when it comes to calling a majority government.
But he says that will swing up and down as the campaign winds on, with new themes, scandals, or big news sending values up and down.