Counterparties: The pundits vs Nate Silver

By Felix Salmon
October 31, 2012

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We’re less than a week away from election, and the political media is setting someone up to lose. Oddly, that person is neither of the candidates, but political polling and statistics blogger Nate Silver. Politico’s Dylan Byersis leading the charge, raising the possibility that Silver “could be a one-term celebrity”. Silver puts a 74% chance on an Obama victory, but that makes no sense to Byers, because “polls have [Romney] almost neck-and-neck with the incumbent”. Byers brings in quotes from insiders and pundits to support the idea that the race is a “toss-up” and that Silver is, in Joe Scarborough’s words, a “joke”.

Silver, however, is completely comfortable with his position, telling Byers:

If the Giants lead the Redskins 24-21 in the fourth quarter, it’s a close game that either team could win. But it’s also not a “toss-up”: The Giants are favored. It’s the same principle here: Obama is ahead in the polling averages in states like Ohio that would suffice for him to win the Electoral College. Hence, he’s the favorite.

David Brooks might not be comfortable with that kind of statement, but as Ezra Klein points out, mathematics is: “If Mitt Romney wins on election day, it doesn’t mean Silver’s model was wrong… the model has been fluctuating between giving Romney a 25 percent and 40 percent chance of winning the election”. Brad DeLong goes back and forth with Byers and Silver in defense of statistical modeling, and the results aren’t pretty for Byers. Jason Linkins slams Politico for failing to differentiate probability from prediction, and instead just “trolling the bejeezus out of Nate Silver”.

Experience, after all, can limit your ability to assess information. Henry Farrell agrees with Paul Krugman that fetishizing inside knowledge and scoops limits what you can learn to what you already know: you become “peculiarly vulnerable to self-reinforcing illusion”. Krugman thinks that in most cases, “careful analysis of publicly available information almost always trumps the insider approach”. — Ben Walsh

On to today’s links:

What $4 Billion Buys You
George Lucas says Disney could make Star Wars films for the next 100 years – MTV

Billionaire Whimsy
The politics and economics of the American austerity lobby – American Prospect

Old Normal
Vocational training: 15-year old interns working on assembly lines – LAT

Hunkering Down
How Wall Streeters endured Sandy: With $1,000 Bordeaux and board games – Max Abelson
“I predict my office will never be cleaner than it will be today”, says New York trader – Reuters

MF Doom
Woman at the center of the MF Global scandal: “They’ve got the wrong chump” – WSJ

#Sandy
The best time lapse video of what #Sandy did to Lower Manhattan – Jalopnik
How the storm brought NYC’s inequality to the surface – David Rohde
Outrage in the powerless zone: Dispatch from lower Manhattan – Gothamist

Primary Sources
Chris Christie’s official order rescheduling Halloween – State of New Jersey
Harvard Business School, deep blue state – Harbus

JP Morgan
JPMorgan sues failed whale-tamer in London court – Reuters

EU Mess
Eurozone unemployment hits record levels, 1 in 4 jobless in Spain and Greece – Guardian

Sad But True
People living in poverty are twice as likely to be depressed – Atlantic

Wonks
Why Kocherlakota is a hero of rigor and intellectual honesty – Matt Yglesias

Alpha
Never mind markets, indices aren’t that efficient – EDHC Risk Institute

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