The Daily Update - US electoral calculus does not always add up

Following the US presidential debate on Monday subsequent polling data has edged back in Secretary Hillary Clinton’s favour estimating her having a ~56% chance of winning vs 44% for Donald Trump. Mrs Clinton’s more prepared remarks and her live website fact checking team seem to have swayed at least a few of the estimated 25% of voters that remain undecided. With less than six weeks to go until the popular vote Hillary looks set to win the Western and North-Eastern states as well as the Great Lake states (excluding Indiana) and New Mexico. Trump is expected to sweep much of the smaller Central and large Southern states. As often is the case, Florida, Pennsylvania, Michigan, North Carolina, Ohio and Colorado are (in order) the most likely swing states according to the polls, data modelling and election simulations from fivethirtyeight a political research team that correctly predicted all state winners in the 2012 presidential election - and of course are hoping to add to this accolade this year. But there are a number of interesting quirks to look out for along the way.

Perhaps most egregious oddity is that (in an extreme scenario of slim wins in less populous states and next to no votes in larger states) a candidate could move into the White House on just 22% of the popular vote. The First-Past-The-Post Electoral College allocation rules and the bias towards smaller states mean that technically a candidate could win 78% of the popular vote and still be at a disadvantage in the Electoral College. The voting pattern is unlikely to be this universally extreme but a minority vote did indeed give the Electoral College advantage and presidency to George W. Bush in 2000, despite Al Gore getting over half a million more votes. This also happened way back 1876 and 1888 which out of 55 elections makes around a 5% occurrence rate. Another peculiarity is that a candidate could win the popular vote but still lose the Electoral College Vote on the 6th January next year. There is an estimated 8% probability for Clinton to win on the 8th November and still not garner enough of the 538 Electoral College votes to beat Trump. So the margin of whichever candidate’s win in six weeks’ time will be important for assessing the likelihood of such a reversal. It’s also still worth remembering that there may be just as many reluctant Trump voters as there are reluctant Clinton votes; many Republicans are still more concerned over liberal Democratic policies than odious character and mindful of other longer term goals such as electing at least one conservative and originalist Supreme Court Judge. With such a close race and more presidential candidate and vice-presidential candidate debates to come, markets are hoping that Secretary Clinton’s margin widens as more undecideds are forced to evaluate the viability and validity of each side’s claims.