What's Your Opinion on Polls?

With election season ramping up in more than one country at the moment you will be hearing plenty about opinion polls as they are gathered, published, dissected and discussed over the coming weeks and months. But just how good are they and what is their track record in predicting what voters actually do?

In short, opinion polls often get it right but they also frequently get it badly wrong. The most recent case in point was last year’s British General Election. In the six months running up to that vote, a total of 230 opinion polls of voters were conducted by a variety of research organisations and published in a range of media outlets. The overall trends in the polls are shown below and from about mid-March onwards we see something of a dead heat emerging between the two main parties, the Conservatives and Labour. Of the last twenty polls taken before that election featuring voter samples ranging from 1,001 to over 18,000 people, eight predicted a tie while a further seven gave either side a one per cent lead. Every indication pointed to a really tight race but the actual outcome was a comfortable win for the Tories.

The results of the obligatory inquiry into this failure were published last month. It found that the probable cause was an under-representation of certain groups of voters such as over-70s, under 30s and ‘busy’ voters in certain types of polls that were conducted. Carried out on behalf the British Polling Council – an organisation with a major vested interest here, a methodological failure was probably the lesser of two evils, though an inability to construct representative samples is a pretty damming criticism. The more significant issue of course is that opinion polls in particular and market research more generally are very poor at predicting what consumers will actually do at some future point for a whole variety of psychological reasons. So enjoy all the prediction and discussion and let’s see if anyone can call it correctly this time!

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The Problem With Market Research

Why Do You Pay For Advice?

So how many people predicted the outcome of yesterday’s enthralling All-Ireland hurling final which ended in the first draw in over 50 years? Yes, probably not too many. And this, despite all manner of analysis, consideration of scenarios and predictions by hurling experts. Trying to predict the future is something that we do all the time. Economists have become celebrities by either telling us that they predicted the global recession or by forecasting how much better or worse it is going to get. And a whole industry has been built around advising you what to do with your money. But two interesting questions arise. How good is this advice and if we believe that it is not all that good, why do we continue to seek it out?

These questions have been the subject of some interesting experimental studies most notably a recent one published by Powdthavee and Riyanto. They asked a group of students to bet on the outcome of five successive random coin tosses. But taped to the desk of each participant were five envelopes predicting the outcome of the successive tosses and students could either pay to see these predictions in advance or see them for free after the coin has been flipped. When an initial prediction turned out to be correct, students were more willing to pay to see the next forecast. This tendency increased after two, three and four successful predictions and furthermore, those who paid in advance for predictions also placed bigger bets on subsequent coin tosses than those who did not.

So psychologically, our instinct is to seek out advice. We often pay handsomely for it – sometimes through the small print and sometimes through the fees charged by experts. Much of the time, this advice is not all that good. For example, research demonstrates that most actively managed investment products rarely beat the market index. The reason we still look for advice is due to a phenomenon called the ‘avoidance of regret’. If you make your own decision you only have yourself to blame but if you took the advice of an expert, the decision is not your fault. So the moral of the story is - spend less time listening to (or paying for!) advisors and pundits. Instead hope for some random good luck and also that Galway get the job done next time!