## Tuesday, August 4, 2015

### Betting markets

The betting markets are moderately confident that Tony Abbott will be the leader of the Coalition at the time of the next election, and that the Coalition would win that election.

Sportsbet has Tony Abbott on $1.40 to be the Coalition leader at the time of the next federal election. Malcolm Turnbull is on$4.50; Julie Bishop is on $5.00; Scott Morrison is on$7.50;  and Joe Hockey is on $16. We will ignore the amusing odds beyond Hockey, other than to chuckle at the odds for Sophie Mirabella on$251, who has equal odds with Bronwyn Bishop. And while Sophie is not in Parliament, she has better odds of leading the Coalition at the next election than Clive Palmer at $501. While odds of$1.40 would suggest a probability in excess of 70 per cent for Tony Abbott to lead the Coalition at the time of the next election, this market has a huge bookmaker's overround. The actual probability from the odds once the overround is considered is something like 47.8 per cent for Tony Abbott; 14.9 per cent for Malcolm Turnbull; 13.4 per cent for Julie Bishop; and 8.9 per cent for Scott Morrison.

Sportsbet has the Coalition on $1.52 and Labor on$2.30 to form Government after the next election. In round terms, these odds equate to a 60.2 per cent chance of a Coalition win and a 39.8 per cent chance of a Labor win.

For the Coalition to win the next election, the polls have about 13 to 14 months to stage a dramatic turnaround. At the moment I have Labor well in front on 52.7 per cent of the two-party preferred vote share to the Coalition's 47.3 per cent.

1. How to you explain the discrepancy between the betting markets and the polling results?

2. There are a few possible answers to this question:

Historically, opinion polls are not very good at forecasting an election result more than 12 months out.

It is unusual (but not unheard of) for a first term government to lose their first election.

Linked to the last point, the perception that people will/still remember the dysfunction under the previous government; and that for a majority it is still greater than any dissatisfaction with the current government.

The view that polls are more like beauty contests, rather than indications of voting intention, between elections. A number of people only think about and form a voting intention close to the polls. Between elections, the opinion polls are only indicating whether the public like the Prime Minister or the Opposition Leader.

etc. etc.