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Breaking down socio-economic data by county in the U.S. allows a reliable election forecast.
——Marvin Zonis

Tight Race in US Election 2020 Forecast: regional heterogeneity, short economic memory and the Covid-19 effect

The U.S. Presidential election of 2016 caught many by surprise.  Almost all polls and pundits predicted a Democratic victory, but Donald Trump won the overwhelming majority of electoral votes (304 out of 538), whilst losing the popular vote by as much as 2.9 million. This misalignment has occurred only four times out of 48 elections held since 1828.

In a paper just released, ‘Regional Heterogeneity and U.S. Presidential Elections’, Hashem Pesaran and his co-author Rashad Ahmed investigate the reasons behind such misalignments. Using data from over 3000 counties, they show how socio-economic factors and regional heterogeneity might shape the Presidential Election in 2020.

Professor Pesaran, an Emeritus Professor of Economics at Cambridge University and a Fellow of Trinity College says “The unexpected 2016 Republican victory is explained by our model. We do not rely on polls but consider many socioeconomic factors, most importantly regional heterogeneity, to account for growing disparities in voting behaviour possibly resulting from increased political polarisation.”

2020 Presidential Election Vote Shares Forecasts by Counties - Republica/Democratic wins in red/blue

He adds the key to his findings are to exploit cross-section variations at the level of U.S. counties, which allows the model to incorporate regional differences. “This shows how the relationship between many socioeconomic variables and voting outcomes systematically differ across U.S. regions.”

Professor Pesaran says that “our results also corroborate evidence of  ‘short-memory' among voters; what we see is that economic fluctuations in the few months prior to the election are much more powerful predictors of how the US will vote, compared to the long-term story.”

The country-wide rise in unemployment and falling incomes due to Covid-19 are likely to be critical for the outcome of the 2020 election. Important factors explaining voting outcomes include incumbency effects, voter turnout, local economic performance, unemployment, poverty, educational attainment, house price changes, and international competitiveness.

The authors test multiple models, all of which forecast a popular victory for the Democratic candidate, but forecast a close electoral college. “Our forecasts from the regional models imply a tight electoral college outcome,” says Professor Pesaran. “Using data available through mid-October, one model forecasts the Republicans will gain 249 electoral college votes, another forecasts 270.” 270 votes are needed to win the presidential race.

“A flip in just one or two state outcomes could swing the entire election. This point re-emphasizes why the aptly named swing states are such crucial political battlegrounds.”

The full paper is available at (http://www.econ.cam.ac.uk/research/cwpe-abstracts?cwpe=2092).

Notes for Editors: Dr Pesaran is a Professor of Economics at Cambridge University and a Fellow of Trinity College, Cambridge. He is also the John Elliott Distinguished Chair of Economics at the University of Southern California. Previously, he was head of the Economic Research Department of the Central Bank of Iran (1974-76) and the Under-Secretary of the Ministry of Education (1976-78), Iran. 

Further details: Hashem Pesaran on mhp1@cam.ac.uk

Media Contact: Julian Lorkin on j.lorkin@econ.cam.ac.ukor +44 7761 170000 

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