I just read this piece on The Drum, taking the line that it’s better to rely on the betting markets, which have Labor and the government level-pegging, than on the polls, which have had Labor well ahead for a long time. Elections are only held every few years, so they don’t provide much data on which to test the relative performance of the two. But, if markets give better estimates than polls, we should expect to see movements in the poll results follow those in the market rather than vice versa (in econometrics, this is called Granger causality). Digging around, I located a study finding that, if anything, movements in polls Granger cause movements in betting markets.
Since a compelling observation beats an econometric analysis for most people, let’s look at the 18 months or so since I last posted on this topic. Labor started out with a small lead in the polls and stayed consistently in front, with the lead varying over time. Meanwhile, the betting markets favored the government until very recently, before moving to even money. It seems clear in this case, that the markets are following the polls and not vice versa.