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Political statistician Nate Silver writes the New York Times FiveThirtyEight blog. His new book, The Signal and the Noise: Why So Many Predictions Fail – But Some Don’t, illuminates the trends that impact our economic and political lives. Silver has thoughts on the value of punditry and polls, and does the math behind the Las Vegas housing bubble:
Humans Losing Battle With "Universe of Information"
There a lot of information in the world today, and what I’d say is that we have to get better at processing all this information, because it’s way beyond our capacity to take every piece of news that we hear, or every single poll that we see, and make sense of it unless we’re being careful about how we sort through everything.
Part of the problem is people don’t realize how small our human insight is relative to the whole universe of information that we have, so we tend to think whatever my view is of the information is right, but everybody else’s is wrong. But we’re perceiving information through a filter, through a subjective filter. We’re only taking into account a small amount of the information that we get every day, if you watch one cable channel or if you watch or listen to one radio program. If you’re only listening to one, you’re getting information through a filter, and that filter may not be perfectly objective at times.
How Vegas Housing Bubble Burst
For every new dollar someone was investing on a mortgage in Las Vegas, there were about fifty dollars that Wall Street was making in bets on the side in the form of mortgage-backed securities that put different types of mortgages together in very complex ways that were rated as being very safe, and of course weren’t. So that compounded the problem where you have a speculative housing bubble - you didn’t have that many more Americans making that much more income and you didn’t have that many more families buying new homes, you had speculators buying them. It was the opposite of what we had in the 1950s when after the war you had a prosperity boom. That’s why it was a house of cards when you saw housing prices begin to decline. The fundamentals wouldn’t support a doubling of housing prices over ten years, which is what happened - it was unsustainable, and then you do feel the pain sooner or later.
TV Pundits Are Not Your Friends
The typical pundit who goes on TV is thinking about being an entertainer rather than actually trying to be accurate or truthful. We looked at basically five years of predictions on the McLaughlin Group, which is this long-running show where you have journalists or pundits kind of come in and literally make predictions about what will happen in political events. Turns out if you go through and score those predictions they get it about half right and half wrong, so you’d do just as well by flipping a coin as by listening to that show. But you have a lot of false balance potentially in news coverage - people want to take both sides of an argument. You have a lot of incentive to create a story, so whoever is behind in the race is trying to make a comeback and you've seen this dynamic shift a couple of times during the campaing already. So a lot of things get in the way of just trying to say OK, I’m looking at the stats. It's hard enough to look at the data even if your incentives are pure. It's much harder when you’re tyring to be an enetertainer or trying to be politically correct, instead of trying to get at the truth.
Mellman Poll Shows Berkley Winning, But ...
The Nevada case is a little bit easier, where the Mellman poll is put out by the Berkley campaign and usually when a campaign releases polls to the public, they have a bias that makes things look better for the candidate than it really is. So the fact that they have her four points ahead considering the bias is about six points, what that means to me is Heller is up by about two. So I don’t look at that as being a good sign for Berkley, frankly.
Still, Democrats May Prevail in Nevada
We should say that in the past couple of elections in Nevada you’ve had Democrats do better on Election Day than they did in the polls where Harry Reid of course was down in most polls against Sharon Angle in 2008. Obama also in 2008 won Nevada by a wider margin than the polls had predicted. So it’s a tough state to poll, where you have a lot of new migrants into the state who might not be in somebody’s database. You have a growing Hispanic population, the hours at which Las Vegas operates are different than the ones pollsters tend to call, and different than ones you have in than most cities. So it’s a challenging environment for pollsters. One factor that looks good for Obama is that the party registration figures, which are hard numbers, Republicans were gaining and gaining and gaining but there have been a lot more Democrats registering in the last couple of months . So that bodes well potentially for Democrats if they get their voters turned out, then Nevada will be in fairly good shape there. If they don’t, it’s a close state.