Most politicians say they do not follow the polls, particularly when they are lagging behind! The reality is that they examine them in minute detail. But long before the recent 2015 general election when Prime Minister David Cameron stated that he followed the betting markets more than the polls we can now see why.
The public opinion polls got it so very wrong. The academics conducting the exit polls could not believe their eyes on election night because they had been blindsided by the opinion polls that were far from accurate.
It seems to me that if you are stopped in the street by a pollster, or telephoned, you are unlikely to answer the questions put to you. Respondent have no wish to offend the political beliefs of the interviewer and very often people will tell interviewer what they think they want to hear. Internet based polling should solve that problem except it most probably makes the situation worse.
So the exit poll conducted by secret ballot is the safest measure and it reinforces the age old system of election by secret ballot as the best way to run a democracy.
There is another way of predicting the outcome of elections other than the fallible opinion polls – following the money placed by gamblers with bookmakers in the election betting market.
Professor Vaughan Williams said that the betting markets incorporate all known and available data into the simplest form – the betting odds.
In 1985 Ladbrokes made a market in the Brecon and Radnor by-election.
During the US Presidential Election campaign of 2004 the polls were mixed: some had Kerry with a two point lead, others gave Bush a four point lead. In the betting market for individual states, the selection which was favourite won in all 50 states. In the US Senate election of 2006 the betting exchanges were one hundred percent correct on all seats.
In the 2008 US Presidential Election the polls showed different candidates winning at different times. On polling day, President Obama was 1/20 with the betting exchanges. It was a landslide for Obama.
But NO was reflected in the betting markets all along. At William Hill a client had staked £900,000 to win £193,000 at an average price of 1/5.
The opinion polls do matter because politicians in London, on seeing the polls in favour of independence, rushed up to Scotland and made rash promises on devolution that will cost the rest of the country.
Most of the polls had Florida too close to call. In contrast the betting markets had Bush winning by a big margin. Had the Democrats took note of the betting markets they would have sent their troops to Ohio, where the betting markets showed the race on a knife edge, and not to a lost cause in Florida. Had Gore won Ohio he would have been President. The history of the world would have been very different.
So which betting market is the best at predicting an outcome? I would suggest the UK because of its low transaction cost at 15% Gross Profits Tax so there is less distortion and bias.
The US is in my view easier to predict because it is nearly always a two person race. Yes/No referendums have the same characteristics. The UK has numerous political parties but, even so, the money poured in on the Conservative Party in the last week of the election and the Conservatives carried the day.