• by Ed DeNicola , Op-Ed Contributor, August 28, 2024

Democrats have successfully threaded the needle transitioning from Joe Biden to Kamala Harris as the party's uncontested nominee. From a prediction standpoint, a contested nomination would have forecasted her doom, but it wasn’t the case at all.

Media industry insiders will get this analogy: national party conventions -- Democratic or Republican -- are to voters what upfront presentations are to media buyers: high stakes sales events rolling out the biggest and best stars. Like upfront presentations, the conventions provide the party’s vision for the upcoming season, or in the case of political elections, a new term.

Although there is no science behind this hypothesis, it may be a prescient indicator that Nielsen ratings were much higher for the Democratic National Convention than for the Republican's. The viewing public was reacting to their interest in the parties, as well as the speakers and entertainment that made up the programming. That said, I wouldn’t bet money based on ratings data alone.

Moving on to more scientific, predictive analytics, I’m excited to start tracking an additional prediction market called Polymarket.

Its users aren’t based in the U.S. for legal reasons, but they don’t have to be for prediction market purposes. Polymarket has some very interesting attributes including:

• It’s a real-money prediction market, unlike some that are virtual.

• The founder of FiveThirtyEight and probably the most famous pollster of them all – Nate Silver – has purchased equity and joined the company as an adviser. Silver previously was a prediction market naysayer.

• It’s 4-years-old and VC-backed to the tune of $70 million-plus, including $45 million from Peter Theil’s Founders Fund.

• Users can use cryptocurrency -- USDC stablecoin – to make trades / bet on outcomes.

While I have yet to see any academic research for Polymarket, Slate reports it accurately predicted Biden would drop out of the election race and that Walz would beat out Shapiro for the Democratic Vice President slot.

As of Sunday evening, Polymarket was predicting a large lead for Harris in its popular-vote-winner market: 74% for Harris vs. 25% for Trump.

However, for its presidential-election-winner market, it has Trump and Harris tied at 50% each.

This implies that the market thinks it’s going to be another close race, and that the Electoral College vote may once again differ from the popular one.

The 13-Keys prediction system is designed to predict the popular vote. Its creator, Allan Lichtman, likes to point out that he missed the prediction for the 2000 presidential election, because it was decided by the Electoral College and not the popular vote. He predicted Al Gore, who won the popular vote, but missed the prediction because Gore lost the Electoral College vote to George Bush.

Lichtman doesn’t mention he was credited with predicting right in 2016 with Trump, but he really missed. The opposite happened, the 13 keys picked Trump based on the popular vote, but Trump didn’t win the popular vote, he won the Electoral College count.

Regardless, the 13 Keys electoral prediction system is about as accurate as prediction methodologies get. It has correctly called nine out of the last 10 presidential election contests, no matter how you spin the numbers.

Since Biden stepped down, the 13 keys’ incumbent key turned against Democrats. That makes three negative keys:

• Incumbent key.

• Party mandate key, based on House elections in 2022.

• Incumbent charisma key. While likable, it’s not apparent that Harris has exceptional charisma along the lines of a Roosevelt or Reagan. Trump doesn’t have it either.

On the positive side, there were four keys Lichtman saw as shaky back in April / May:

• Third party key due to Robert F. Kennedy Jr.'s independent campaign.

• Social unrest key resulting from protests on college campuses.

• Foreign military failure.

• Foreign military success.

Two of the four shaky keys have since stabilized in favor of Democrats:

• The third party key is no longer at risk as RFK Jr. ended his campaign this past week.

• The social unrest key is more secure since college protests related to the issue of Israeli military operations against Palestinians have mostly subsided.

Six keys must go against the incumbent party candidate – Harris – to predict a loss and that’s not the case here. As a result, the 13 Keys predict a Harris win.

Looking at the polls, FiveThirtyEight’s average has Harris ahead by 3.6 percentage points (Harris 47.2% vs. Trump 43.6%).

Prior to becoming the Democratic Party’s presidential nominee, she was usually polling way lower against Trump than Biden. What’s changed? She’s the same person now that she was then?

This is a factor I admittedly underestimated about Harris. My unsubstantiated theory is that once she took on the title of Democratic presidential nominee, she also assumed all the respect that comes with the role.

Her polling numbers were instantly higher and more in line with those Biden received. This isn’t to diminish her achievements or character, it’s simply what happens when someone is promoted to an important job. You see it happen in corporate America all the time.

Perhaps the best predictor of a Democratic win is the increase in the Iowa Electronic Markets' (IEM’s) Democratic Party share price for its Presidential Election Winner-Take-All Market. It has moved up from 0.700 last month to 0.830 this month.

During the same interval, the Republican Party share price has gone down from 0.355 to 0.193.

Keep in mind that the IEM has a better track record than polls and it has been predicting a 2024 Democratic Party win all along since its 2024 Presidential Election Market was published.

PredictIt, which has been moving up and down -- more like a poll than a prediction market -- is now more in line with other markets: also predicting Harris to be the presidential election winner. It has her priced at 0.55 cents versus Trump at 0.49 cents.

In 2016 when I was working at Cambridge Analytica on the Trump campaign, all the polls and prediction markets were predicting Hillary Clinton would win. The numbers weren’t even that close.

On election night I was sitting on my couch exhausted and drinking a scotch on the rocks expecting Trump to lose. I’ll never forget watching the results come in on TV announcing that Trump had won. It blew my mind. Having been a data nerd for virtually my entire career, I believed the predictions and thought it was a fait accompli. It wasn’t and the rest is history.

Like in 2016 when Trump was running against Clinton, predictive science is leaning towards a Democratic win. Clinton's loss was one of the greatest polling failures of all time. In fact, J.D. Vance wrote a book about it. And look where he is now. Who could have predicted it?