Short Note on Presidential Polls

September 26, 2016

The first debate between Hillary Clinton, the Democratic Party nominee, and Donald Trump, the Republican Party standard-bearer, takes place tonight. Presidential opinion polls now show a race that’s too close to call both nationally and in the key states that are likely to determine the outcome. Momentum is clearly behind Trump’s sail, however, since the contest in early August pointed to a landslide Clinton victory.  There’s a sense of deja vu in this turn of events. In 2008 and this year, Clinton began quests for the party nomination as the prohibitive favorite only to be outflanked by Obama and the passion underdog from Sanders’ upstart challenge this time. Trump, on the other hand, has made a habit of outperforming the early handicappers.

It goes with out saying that the winner six weeks from tomorrow matters enormously in financial markets. Clinton and Trump could not represent a greater difference from the standpoint of style, substance, and predictability. Whatever one wants regarding likely policies under the two choices, the criteria of predictability alone points to a better initial market response if Clinton wins. Although he has hidden much from the public, Trump has made no secret that he views unpredictability as a virtue in deal-making and organizational management. Markets can deal with almost any news if such is known transparently in advance and considered reliable. What markets do not process well is uncertainty. It will take some time getting used to Trump’s style, and markets lack the patience to wait.  As the the polls have narrowed, it’s not surprising that financial markets have looked brittle of late, but perhaps polls are less accurate than generally realized.

Polls have never been omniscient. The Literary Digest in 1936 infamously ran a poll that predicted Landon in a landslide win over Roosevelt. Dewey was picked to beat Truman in 1948. Four years ago, Romney’s pollsters confidently told him to expect victory against Obama. At this stage of that campaign, Obama had led Romney by just two percentage points in polls, and the race had seemed to tighten. As it is, Obama won by only four percentage points of the popular vote, but that had translated to a comfortable 332 to 206 margin in the electoral college math.

The polling method of phoning a sample of households to ascertain how elections will turn out is now deeply flawed. America landed a man on the moon nearly 50 years ago. The New York City bomber in the Chelsea district earlier this month was caught in about 36 hours. Hand-held electronic devices with encyclopedic knowledge are now prevalent. But law enforcement is completely powerless to shut down the proliferation of phone calls received that are solicitations or con-game misrepresentations altogether. These indeed can appear at times to encompass 95% of all calls received. As a consequence, a mounting share of people simply will not answer an incoming phone call unless through caller I.D. it is from a person who is known and to whom one is inclined to speak.

The phone answering habits of households are now so distorted that it is not possible to construct a sample of opinion polls that is not polluted beyond any resemblance to a statistically significant representation of the general voting population. That being said, even if investors are skeptical about the accuracy of polls showing a dead heat between Clinton and Trump now but momentum moving toward Trump, they are being prudently rational to be hedging against a Clinton win. Campaigning is not a well-honed skill of hers. While lacking past political experience, running for office is all about marketing a product, and that is Trump’s best skill. U.S. voters from both parties are hankering for change, and that too favors a challenger over an incumbent. Finally, in the past 64 years, a party has held onto the White House for longer than eight years, which is the Democrats’ current span, just once.

Copyright 2016, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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