Monday, April 29, 2013

Who will win the Malaysia elections?

On 5th May, Malaysians will decide whether to keep the Barisan Nasional (BN) in government or usher in a new administration under Pakatan Rakyat (PR). This year's elections will be one to watch - BN lost its customary two-thirds majority in Parliament, on top of five states in the 2008 election - will BN make up for lost ground, or will it continue to lose votes?

Bookmakers have twice forecast electoral results quite accurately. In the recent Punggol East elections, the PAP was forecast to win with a 45% probability, and the Worker's Party 55%. The actual outcome was quite close, with the Worker's Party winning 54% of the vote. Similarly, President Obama was given a 93 - 98% chance of winning the election in the 2012 US elections. He, of course, went on to win a second term in the Oval Office.

What are bookmakers saying about the Malaysian elections? According to 188Bet, betting $11 on BN winning a 112+ seat majority gets you $6, while betting $10 on a BN minority gets you $13. So the odds are for a BN win, at least as of today. Converting these odds into probabilities, we see that BN has a 60% chance of retaining a 112+ seat majority in Parliament. 

Addendum: it's 5th May, voting day, 430pm, and the odds have changed. Now, betting $2 on BN winning gets you a return of $1, and $5 on BN losing gets you $7. This means BN has a 62% chance of winning, and correspondingly a 38% chance of losing. The odds have move slightly in the incumbent's favour. 

Addendum: BN won the election with a 59.91% majority, remarkably close to the 60-62% odds derived from bookmakers!

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