The former boss of Newspoll Sol Lebovic likens opinion polls to the scoreboard in a football game. The numbers show who is leading but not who will win. “Polls aren’t necessarily predictive, nor should they be”, he wrote in The Australian on Saturday. “As we get closer to the election there is a greater chance they will reflect the final result. However, just as in football, the winner is not necessarily the side that is leading before full-time. The most exciting football games, or elections, are in fact those where we do see late changes.”

And late changes are clearly what a lot of people expect as the betting markets tell a very different story to the opinion polls. Believe the average of the polls showing Labor with around 56 or 57% of the two party preferred vote is what will happen on election day and, using the normal margin of error for polls, Labor would be assessed at well over a 90% probability of winning. The betting markets as measured by the Crikey Election Indicator (based on the Betfair betting exchange) puts the Labor probability at only 67%.

My whiz on all these matters, the man whose horse ratings in the London Sun years ago had the paper describe him as “Superbrain – the man with a computer for a mind” and who earned the title of the greatest horse handicapper in the world from Las Vegas oddsmaker Roxy Roxburugh, sent me a note this morning which might help those of you wishing to put some excitement in to election watching by having a bet:

I have been studying your seat by seat odds paper.

I have tried to calculate a standard deviation that links the poll findings to the betting. I am not 100% sure of the accuracy of what I have done, but I think it’s ok.

My calculation goes like this. The betting says 67% to 33% and that translates to a difference of 0.866 standard deviations under the normal curve.

The polls say 57% to 43%, so in order to link the two pieces of information we have to say one standard deviation in the betting market equals 16.2% of polling information. (57-43)/0.866.

That does seem very high, given the previous history of the polls. But that appears to be the view that the betting market has about the polling information.

I have applied that higher standard deviation to the “at risk” seats and get a more cautious set of odds.

Of course the polls might deserve to be accorded a smaller standard error and the market is being too cautious, but as you know I am a great respecter of betting markets.

One other minor point, I am not sure that the 2004 election margins are the best starting points for Wentworth and Bennelong.

The betting says:

Coalition: 66.7
ALP: 33.3

What does that say in Standard Deviations?

0.433: 0.667493
-0.433: 0.332507

It says that the betting market assessment of the difference is 0.433 + 0.433 = 0.866 standard deviations.

The polls say the two party preferred is:

Coalition: 43
ALP: 57

In order to link the two pieces of information don’t we then need to say (Stdev = pcent):

0.433 = 7%

or

0.866 = 14%

So, in betting market terms, the standard error or one standard deviation is 1/0.866 *14 = 16.166. Applying the standard error of 16.166 to the most marginal seats we get:

Seat

Held By

Present
Margin

Forecast
Swing

Forecast
Margin

ALP %
Chance

Mean

Revised ALP %
Chance

NSW

Parramatta

Lab

-1.1

9.2

8.1

94.7%

58.1

69.2%

Wentworth

Lib

-2.6

9.2

6.6

90.7%

56.6

65.8%

Lindsay

Lib

-2.9

9.2

6.3

89.6%

56.3

65.2%

Eden-Monaro

Lib

-3.3

9.2

5.9

88.1%

55.9

64.2%

Bennelong

Lib

-4.0

9.2

5.2

85.1%

55.2

62.6%

Dobell

Lib

-4.8

9.2

4.4

81.1%

54.4

60.7%

Page

Nat

-5.5

9.2

3.7

77.0%

53.7

59.1%

Cowper

Nat

-6.6

9.2

2.6

69.8%

52.6

56.4%

Paterson

Lib

-6.8

9.2

2.4

68.4%

52.4

55.9%

Robertson

Lib

-6.9

9.2

2.3

67.7%

52.3

55.7%

Hughes

Lib

-8.8

9.2

0.4

53.2%

50.4

51.0%

NT

Solomon

Lib

-2.9

8.8

5.9

88.1%

55.9

64.2%

QLD

Bonner

Lib

-0.6

9.1

8.5

95.5%

58.5

70.0%

Moreton

Lib

-2.8

9.1

6.3

89.6%

56.3

65.2%

Blair

Lib

-5.7

9.1

3.4

75.2%

53.4

58.3%

Herbert

Lib

-6.1

9.1

3.0

72.6%

53.0

57.4%

Longman

Lib

-6.6

9.1

2.5

69.1%

52.5

56.1%

Flynn

Nat

-7.8

9.1

1.3

60.3%

51.3

53.2%

Petrie

Lib

-7.9

9.1

1.2

59.5%

51.2

53.0%

Hinkler

Nat

-8.8

9.1

0.3

52.4%

50.3

50.7%

Bowman

Lib

-8.9

9.1

0.2

51.6%

50.2

50.5%

SA

Kingston

Lib

-0.1

9.4

9.3

96.9%

59.3

71.7%

Wakefield

Lib

-0.7

9.4

8.7

95.9%

58.7

70.5%

Makin

Lib

-1.0

9.4

8.4

95.4%

58.4

69.8%

Boothby

Lib

-5.4

9.4

4.0

78.8%

54.0

59.8%

Sturt

Lib

-6.8

9.4

2.6

69.8%

52.6

56.4%

TAS

Braddon

Lib

-1.2

8.8

7.6

93.6%

57.6

68.1%

Bass

Lib

-2.7

8.8

6.1

88.9%

56.1

64.7%

VIC

Deakin

Lib

-5.0

11

6.0

88.5%

56.0

64.5%

McMillan

Lib

-5.0

11

6.0

88.5%

56.0

64.5%

Corangamite

Lib

-5.4

11

5.6

86.9%

55.6

63.5%

LaTrobe

Lib

-5.9

11

5.1

84.6%

55.1

62.4%

McEwen

Lib

-6.5

11

4.5

81.6%

54.5

61.0%

Gippsland

Nat

-7.8

11

3.2

73.9%

53.2

57.8%

Higgins

Lib

-8.8

11

2.2

67.0%

52.2

55.4%

Dunkley

Lib

-9.4

11

1.6

62.6%

51.6

53.9%

Kooyong

Lib

-9.6

11

1.4

61.0%

51.4

53.5%

Goldstein

Lib

-10.1

11

0.9

57.1%

50.9

52.2%

Menzies

Lib

-10.7

11

0.3

52.4%

50.3

50.7%

WA

Hasluck

Lib

-1.9

4.4

2.5

69.1%

52.5

56.1%

Stirling

Lib

-2.1

4.4

2.3

67.7%

52.3

55.7%