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Trading politics: UBC runs market to predict provincial election results

On Wednesday, the B.C. Liberals and NDP were neck and neck in the eyes of bettors.

"People reveal their true belief about the outcome of an election by putting money at risk," professor says

Brenna Rose · CBC News ·
The Sauder School of Business Prediction Market has been allowing people to place money on the outcome of elections for approximately 20 years. (CanStock)

The best way to determine the outcome of an election before ballots are cast is through market predictions, argues a UBC professor who has been running election stock markets for 20 years.

"People reveal their true belief about the outcome of an election by putting money at risk, even if it's not their preferred outcome," said Werner Antweiler.

Antweiler, who teachers at UBC' Sauder School of Business, runs an election prediction market exercise for provincial and federal elections. The not-for-profit venture is used as a learning exercise for students. 

People can shell out up to $1,000 to buy and trade shares representing B.C.'s political parties.   

"The changing prices translate into predictions of the popular vote, the seat share and who will form the next majority government,"  Antweiler said.

He believes they provide a more accurate representation than polls. 

"There's a lot of discussion about the quality of polling in recent years. We have seen that polls were off in the last B.C. election. We have seen them off in Quebec and Alberta and, to some extent, in the United States with the recent presidential election"

In Angus Reid's last poll before the May 2013 provincial election, the NDP was the party of choice for 45 per cent of decided voters and leaners, with the governing Liberals in second place with 36 per cent support. The Liberals went on to win 44.4 per cent of the popular vote and form a fourth straight majority government, while the NDP picked up 39.5 percent.

But Antweiler's market was also off in the 2013 election, with the final betting odds similar to the polls.

"Last time our market did not do very well ... as many traders were following the polls in 2013, they did not predict the win of the B.C. Liberals," he admitted. 

"Only during the last day of trading did some traders change positions. Those who did made a rather significant profit in the winner-takes-all majority government market."

Polls vs. markets

Kara Mitchelmore, CEO of the Marketing Institute and Intelligence Association, said there are significant differences between polls and election markets.

"I don't think it's fair to pit one tool against another," she said, adding that investors in election markets often base their decisions on data from polls.

The reason polls work when they're done well is that they're based on valid science, Mitchelmore said.

On Wednesday night, the market predicted 40.3 per cent of the popular vote for the B.C. Liberals compared to 38.6 per cent for the NDP, and 42 seats for the Liberals compared to 40 for the NDP and five for the Green Party.

But on the question of who would form a majority government, the market had the B.C. Liberals at 47.4 per cent, compared to 48.0 per cent for the NDP.  

The market is open to Canadians 19 years of age or older. 

With files from The Canadian Press

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