GREG BECKER: Interpreting the US presidential election

Elections will be held in more than 100 countries that are collectively home to more than half of the world’s population this year. The SA national election in May will clearly have the most impact on the lives of South Africans, but the elections of major trading partners such as the UK and US will also affect us.

Reporters, pollsters, lobbyists and commentators wrote about the 2024 SA election, constructing a range of arguments explaining the outcome. Irritatingly, many such arguments are unfounded and partisan, presenting only one side of the story.

Numerous polls were conducted before the SA elections, with more than 15 being made publicly available. Every poll publicly shared (after the MK party was formed) had the ANC, EFF and MK earning more than 60% of the vote, which proved to be accurate.

The upcoming American election presents additional challenges as the candidate winning the popular vote may not win the White House. In the US the electorate votes for a presidential ticket and (in almost all cases) the candidate that gets the most votes in a state gets to nominate the electoral college representatives allocated to that state.

The electoral college then meets and elects the president, and the candidate with 270 of the 538 electoral college votes will carry the day and be sworn in as the next US president on January 20 2025.

Based on a synthesis of past election results and current polls, commentators and pollsters have been able to agree that the outcome of this US presidential election is clear in 43 of the 50 US states. In these states, voter turnout is unlikely to be very high, and a party may win by more than 10%.

Winning margin

This presidential election will be decided in the other seven “battleground” or “swing states”, where the outcome is now too close to call — Arizona, Georgia, Michigan, Nevada, North Carolina, Pennsylvania and Wisconsin.

Donald Trump won six of these seven swing states in 2016, but only one in 2020, with the winning margin in 2020 always being less than 3%. Before the 2020 election Real Clear Polling’s summary statistics combining all the polls in each state predicted that Biden would win all seven states.

When the votes were finally tallied, the polls had overstated the support for the Democratic candidate by an average of 3.66% per state. This phenomenon has been observed consistently, and despite pollsters refining their methodology the bias has persisted.

US pollsters will conduct more than a 1,000 polls over this election cycle, and Real Clear Politics has been collecting and collating the data from multiple sources, providing a single summary statistic at regular intervals.

In early July the polling data indicated that the Joe Biden/Kamala Harris ticket would lose to the Trump/JD Vance ticket, and this certainly contributed to the Democratic Party switching to Harris/Tim Walz. Since the latter ticket took over the Democratic nomination the polls have indicated a far closer race.

Polls measure a subset of the electorate at the time they are conducted. But the mood of the electorate can change quickly, as illustrated by the impact of Biden dropping out. Prediction markets such as Polymarket may be a better predictor of the eventual outcome as they reflect the market view — punters putting their money where their mouth is, extending the efficient market hypothesis to nonfinancial markets.

Substantial sums

Substantial sums are being wagered on this election, with for example $3bn having been bet on the US election outcome on the Polymarket platform alone so far. This will grow, but may still pale in comparison to the $10bn that will be spent on campaigns this election cycle by candidates, their parties, and their supporters, whose return will come in the form of influence, policies and pork.

At the time of writing, polls, prediction markets and betting shops broadly agree that Harris is on track to win the popular vote (60:40), but that Trump is on track to get a majority in the electoral college (64:36), which would lead to him returning to the White House. This is similar to what happened in 2016, when Trump received fewer votes than Hillary Clinton, but had enough electoral college votes to become president.

The race remains close, but drawing wisdom from the crowds betting on Polymarket, the Trump-Vance ticket has almost twice the chance of winning as Harris-Walz with less than two weeks to go.

• Becker, a retired actuary and recently qualified maths teacher, is founder of MyTutor.chat. This article should not be read as form guide, but rather as a curiosity for those unable to vote, but who will be affected by US foreign, trade and fiscal policy, which will also affect asset prices.