Quant election odds update

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Quick update to election odds from earlier this week after the final leadership debate:

Australian Federal Election Odds

Both major parties improved odds in seats they were already favoured to win, but there was little major movement elsewhere.

Things still look grim for the Coalition:

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  • If every single one of the 21 “Maybe” and “Toss-up” seat falls to the Coalition, they will only have 73 seats, with Labor on 74.
  • If Labor win 2 of the 21 Maybe and Toss-up seats then they will have an outright majority. If they win 1 of the 21 and can convince an independent to be speaker then Labor will have a majority.

As a reminder of the thought process behind the analysis:

I have a working theory that overall betting odds on elections are affected by what people wish would happen as much as what people think will happen. However, my theory is individual seat odds are less likely to be affected by the casual gambler and the betting odds are likely to be dominated by either (a) hardcore gamblers or (b) those with actual “on the ground” insight into what is happening – and both of these are groups I believe can offer insight into likely outcomes.

My next step is to categorise the seats into categories based on odds:

    • Very Likely = $1.17 or better, implying an 85% chance of victory
    • Likely = $1.18-$1.50, implying a 67%-85% chance of victory
    • Maybe = $1.5-1.8, implying a 55%-67% chance of victory
    • Toss-up = any worse odds

    This gives me a better feel for the likelihood of an election outcome – in the past, this methodology has been successful at picking winners or identifying that it was too close to call (for the Gillard hung parliament). Basically I add up the likely and very likely’s and then look at how the remaining seats would need to fall.

  •  Final thought – while the Warringah odds are close, at pixel time Tony Abbott is level even after the GetUp polls showing a likely loss for the Coalition. Given that Tony is a high-profile polarising figure, I’m guessing that Warringah is also affected by people betting for what they wish would happen – I just don’t know in which direction…
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    Damien Klassen is Head of Investments at the Macrobusiness Fund, which is powered by Nucleus Wealth.

    The information on this blog contains general information and does not take into account your personal objectives, financial situation or needs. Past performance is not an indication of future performance. Damien Klassen is an authorised representative of Nucleus Wealth Management, a Corporate Authorised Representative of Integrity Private Wealth Pty Ltd, AFSL 436298.

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