Don’t trust Trump swing in polling, prediction markets

Data expert Nate Silver is known for making big calls on elections and at the poker table, and right now, those two worlds have converged as both presidential election polls and betting markets show momentum building for Donald Trump and declining for Kamala Harris with less than a week to go before Election Day.

Silver is on the record since last week as saying the odds favor Trump — he laid out his call in a New York Times op-ed — but he also described it as a “gut instinct” rather than more certain data science. In an interview with CNBC’s “Closing Bell: Overtime” anchor Jon Fortt at the CNBC Technology Executive Council Summit in New York City on Tuesday, Silver laid out several big caveats about current polling and betting markets.

Silver told Fortt that his current model shows the odds favoring Trump, who holds a 55% to 45% win probability advantage over Harris.

But he also said for any anecdotal example he can offer as to why Trump’s momentum is peaking, “there is a counter example.”

Trump’s momentum in the polls has narrowed or erased Harris’s lead in some key swing states, but Silver says he thinks that after two cycles in a row in which the polls were “pretty bad” and plenty of criticism pointed at the polling industry ever since 2016, “a lot of pollsters are throwing up their hands.”

“They’re printing a tie,” Silver said at the CNBC event, giving the example of a hypothetical pollster conversation: “‘Harris is up 3%? Let’s say 1%. Trump up by 4? Let’s say 1.5%. There is what we call herding, where people are gravitating towards the consensus. They don’t want opinions too out of line.”

Another factor that could be skewing the polls is if Trump’s voters are more “charged up and excited,” which might lead them to partake in more polls than they have historically, and lead Harris-leaning voters to partake in polls less.

Political polling is never as precise as people expect, Silver said, noting that in most scenarios if you modeled a 52%-48% edge and it turned out to be the reverse, that would still be pretty close. But political polling is an exception, and it is getting even more difficult for the polls to get things right.

The polls in recent elections have been off by three to four points “systematically, across the board,” Silver said, so recent small swings in polls favoring Trump are “swamped by the uncertainty … tripping off the noise, basically,” he said.

Five percent of people answer polls, “and they are weird,” Silver said.

Most people no longer even have the landline phones which past election cycle polling history relied on. “Old white people answer the phone, but others vote,” he added.

Why the betting markets may be all ‘vibe and chatter’

The betting markets show a much bigger edge for Trump, with major wagers placed on Polymarket, Robinhood jumping into the action, and presidential election contracts surging in popularity.

Wall Street research reports from big banks and billionaire investors including Ken Griffin and Stanley Druckenmiller have been pointing to recent action in stocks and bonds as a sign that there is greater conviction about a second term for Trump. Shares of Trump Media, which runs the former president’s Truth Social social-media platform, had surged in recent trading, too, though they remain extremely volatile, down 22% on Wednesday. 

Critics have raised concerns that the election betting markets are potentially being manipulated. But Silver, who is a consultant to one of the leading prediction markets, Polymarket, says he wouldn’t pay much attention to the betting markets data right now, as they simply may not be very accurate at this moment in the election cycle. In principle, they can account for additional information such as early voting and historical data, but there is limited historical data on elections for the prediction markets to use as a basis for accuracy, making most of these calls “calibrated based on vibe and chatter” rather than useful information, Silver said.

There are distinct moments in time when prediction markets work. Within minutes of the debate between Trump and Biden ending, Silver said, the prediction markets knew it was bad for Biden, and potentially implied a more difficult race for Trump as well. And on election night itself, there are plenty of smart people who can drill into the county-by-county votes as they come in and figure out which way the election is leaning. But right now, Silver said, what is being seen in these markets may be a sign that they “can get a little carried away” in their conviction rather than proving they can “escape the conventional wisdom,” which is what good data analysis does.

The real money is made in bets that can generate outsize returns. Trump is not nearly as good a bet to the gambler as he was in 2016. In that election, Silver’s model had Trump’s odds of winning at 29%, which was almost double Trump’s odds in most of the polls. To the gambler, that was a situation in which the risk was worth taking with one winning bet making up for all the lost ones many times over. That’s not the case this time around. In the current prediction markets, Trump is favored by as much as 66% to 34% over the vice president. And that’s with the polls and models showing a much tighter race, placing Harris in the position of being arguably the better bet.

Either way, Silver says of the current election and latest data, “Anyone who is confident about selection is someone whose opinion you should discount.”

All the reasons why Trump may win and Harris lose

There are multiple reasons why Silver sees Harris as being vulnerable. Inflation and immigration are among the losing issues for Harris that she inherited from the Biden administration, he said, noting that Biden was so unpopular with voters he had to exit the race, and even if inflation is now under control, prices are still much higher than they were four years ago.

Worldwide, he noted, incumbent parties have been having a tough time in elections. The poker player in Silver — he has won over $800,000 lifetime as a professional player — described Harris as having “a tough hand to play.”

On the other hand, Silver noted Democrats have won five of the past six popular votes, abortion is a big liability for the Republican Party in this election, and Democrats are generally good at getting voters to turn out, while Trump more or less handed off that responsibility to Elon Musk, who has no prior experience with voter campaigns. Though even here he added a caveat, saying this election could be one in which surprise turnout helps Trump more than Harris. Voter registration data has shown gains for Republicans in key swing states that go against recent historical patterns.

“First-time voters are not as blue as they usually are,” Silver said. He described a liberal-leaning first-time voter as being “not inspired” by big structures like the Democratic Party anymore, though he stressed this is a fundamental shift and not specifically tied to the Middle East politics.

“The margin more likely to vote for Harris has shrunk,” Silver said.

The recent polling data has shown younger Black, Latino and Asian-American voters are migrating to Trump in numbers that defy the historical trend. “That’s where he has grown the most,” Silver added.

He gave the example of an 18 year-old voting for the first time and who would have been 10 when Trump was first elected as a voter unlikely to be swayed by any concerns lingering from Trump’s term in office. And for young Black voters, Silver said, the civil rights era is a distant memory, which can sever historical ties to the Democratic Party.

Younger voters, especially, Silver said, are “unmoored post-Covid.”

Silver does not think that the Democrats made a mistake in replacing Biden at the top of the ticket. “Biden was on track to lose in a landslide … all the swing states would have gone for Trump … they [the Democrats] were rescued from certain death,” he said. But he does think the Harris campaign may have made mistakes in placing too much faith in what was possibly just a “sugar high” in the polls after the convention and debate against Trump, which most people thought Harris handled well. In the short-term, they “ran on vibes” Silver said. In his view, the Harris team didn’t have a longer-term message, and “didn’t think of how it would play out through November.”

One advantage Harris does have is that she remains more popular than Trump, for a variety of reasons, including his convictions. “Trump is far from being an optimal candidate,” he said.

Correction: Stanley Druckenmiller is among the investors who have been pointing to recent action in stocks and bonds as a sign that there is greater conviction about a second term for Trump. An earlier version of this article misspelled his name.