Why Is It So Hard to Get the Fundamentals Right?

Me, yesterday:

…without any dramatic trend the resulting balance of economic indicators is favorable for Obama, though not strongly so.  This is, in part, why the forecasting model that Lynn Vavreck, Seth Hill, and I helped develop for Wonkblog, suggested Obama would win.  Lynn and I reach the same conclusion with a elaborated forecasting exercise in “The Hand You’re Dealt.”  This is, in part, why forecasts that build in economic indicators—as at 538 and Votamatic—suggest the same.  And yet people still think Obama should be losing because of the economy.  That is simply not the case.

Charlie Cook, today:

Whether one looks at polling measurements of whether voters think the country is headed in the right direction, at consumer confidence, or at key economic measurements such as growth in gross domestic product, deviations in the unemployment rate, or the change in real personal disposable income, it is puzzling, to say the least, why polls show President Obama and Mitt Romney running neck and neck. Incumbents generally don’t get reelected with numbers like we are seeing today.

And then he’s off into riffs on Romney’s various problems.  He’s not a “natural candidate.” He didn’t air enough positive ads to make voters “comfortable” with him.  He should have taken Rubio’s position on immigration to win Latinos.  He shouldn’t be having a discussion of Medicare.

Maybe those things are true.  Or maybe the economy just doesn’t predict that Obama should be losing.  I’ve said it before and I’ll say it again: many an  unduly complicated interpretation of an election began with a misreading of the fundamentals.  Fortunately, I don’t need to say much more.  Just read Jon Bernstein, Jamelle Bouie, Matt Dickinson, and especially Sean Trende.

2 Responses to Why Is It So Hard to Get the Fundamentals Right?

  1. Nadia Hassan August 24, 2012 at 10:51 pm #

    Well, Professor Sides, to be fair, the perception is that the economy sucks, and some indicators do look pretty bad for the Democrats. Ezra Klein admitted that his rule of thumb was that at 150,000 jobs/month Romney was favored. The post prompted Drew Lizner to talk about well designed models versus gut instincts.

    I think the core of the issue is that intuition does not always align with probabilistic thinking, especially applications of it in complicated situations. This is consequential when people unfamiliar with the pitfalls of modelling face hard numbers, figures, or models with impressive and hard to argue with track records. One looks at something like the Hibbs model, or even those from Ray Fair or the Colorado team, the claim that no President has won with unemployment above eight percent, cross-national data during the Great Recession, and so forth coupled with perceptions, it just sounds plausible.

    Also, recall that in 2004, some experts especially focused on economic fundamentals were predicting a bigger victory for Bush 43, and of course, some missed badly in 1992, etc. 2012 is a pretty complex case.

  2. Sorcerer Mickey August 25, 2012 at 2:39 pm #

    “Why Is It So Hard to Get the Fundamentals Right?”
    I guessing, too many fundamentalists?