ELECTION PREDICTIONS – AT 11:34 A.M. ET:  We publish predictions and polls because they're fun, and may give us some indication of where the public is at one moment in time.  I think Justin Wolfers, at The New York Times, has it right:  The predictions by the pundit class are outpacing the polls, predicting a solid GOP victory a week from Tuesday, whereas the polls are more cautious.  The "Leo" he refers to is his team's statistic method for determining who will win:

One very real possibility is that the Republicans are just starting to open up a decisive lead, and this will start to show up in polling next week. Because our statistical models are programmed to be somewhat conservative around turning points, this lead will take some time to filter through to Leo’s bottom line. And while poll-aggregation models like Leo try to figure out the underlying average levels of support from recent polls, traders in prediction markets are free to extrapolate recent trends forward. By this view, Leo’s estimates will converge toward the prediction markets as Election Day approaches.

Or maybe Leo has it right, and the markets are just overconfident. While possible, history in fact suggests that political prediction markets tend to undervalue strong favorites. Based on the historical pattern, an 87 percent chance in prediction markets might suggest an even stronger likelihood of Republican victory, perhaps as high as the mid-90s.

Another possibility is that what we’re seeing is a prediction market bubble driving the Republican stock to levels unsupported by fundamentals. Perhaps, but with the stock set to expire Nov. 4, it’s hard to see what would keep the bubble afloat. Market manipulation is also a possibility, but with Republican support so strong across a variety of prediction markets, it sure doesn’t look like it.

COMMENT:  I remain very cautiously optimistic, and I worry that polls that are too positive can drive people on our side to stay home on election day.  (Why vote when it's in the bag?)  President Dewey learned all about that in 1948. 

We must still fight as if we're 20 points behind.  Nothing is certain.  I prefer Larry Sabato's conclusion that, while the GOP is probably favored to take control of the Senate, anything can still happen.  Ask me for predictions after the election.  That's when I give them, and I'm always right.

October 25, 2014