Sunday, November 11, 2012

Nate Isn't That Great

The election is over, and for some strange reason, Nate Silver's prediction achievements are being lauded--almost as if we have some new Einstein in our midst.

After all, Nate correctly predicted the outcomes of all 50 states.  Do you know what the chances of that happening are?

It turns out to be much higher than what one might expect.  Nate was not the only one to predict all 50 states correctly, but he's the only one you'll hear about, because he's the one who works for a major newspaper.

You see, Nate used something called a Monte Carlo simulation.  These are neat models where you input some "known" variables and allow random fluctuations to change the outcomes.  You run thousands of election simulations through the random generator, and you study the outcomes.  If a majority of the simulations show Obama winning, then overall, you expect Obama to win.

If you go to Nate's site and scroll down to the graph that shows "Electoral Vote Distribution" you can see the outcomes of each of the individual simulations.  It appears that a couple had Obama winning only 200 electoral votes at one extreme and as high as 370 at the other extreme.  The higher the line on that chart, the more simulations there were that resulted in that electoral count outcome.

The highest line is at 332.  20% of the simulations showed this count.  This is EXACTLY the count that Obama got.  Wowzers!  The second highest line is at 303, which basically gives Florida to Romney.  That outcome occurred in 16% if the simulations.  If you take the average of all the outcomes, that gives the expected outcome of 313.

This is all neat and all, but one problem with Monte Carlo simulations is that the mode or mean (depending on how you set it up) is already set BEFORE you run the simulations.  That is, it will be determined by the non-random inputs you put into the model.

The biggest inputs into Nate's model were poll results.  As each newer poll gave more up-to-date information, Nate updated his model.  And guess what!  The mode (highest point) of his simulation outcomes MATCHED the polls.

In other words, it wasn't Nate Silver who predicted the outcome, but it was the POLLS.  Nate only compiled the information with neat bells and whistles, and passed that information to us, the consumers.

Now, as a mathematician, I totally ate up Nate's predictions.  I love the stats that he compiled, and how he showed which states had the biggest probability of switching to the other side, and how much sway each individual voter had on the election.  That's all cool stuff.  Yet, that's not what he's getting press about.  Rather, it's the fact that he correctly predicted all 50 states.

But he didn't do that.  I'll say it again ... it was the POLLS.

If you don't believe me, follow this simple exercise.

First go to Nate's site and scroll down to the map.  Look at his predictions.

Next go to CNN (or your favorite news source) to check out the actual results.  Compare the maps and say, "Ooh Ahh!" over Nate's predictions as you confirm that every single one of the states matches.

Next go and view CNN's own projections from a couple of weeks before the election.  These are predictions from using poll data plus whatever cool math tricks they use.  Just in case the link is broken, I'll point out that their projection excludes eight "battleground" states: NV, CO, IA, WI, OH, VA, FL, NH.  Now, if you compare CNN's projections in the remaining 42 states, you'll see that they accurately predict each one.

And finally, visit my newly found actuary friend's site.  His name is Patrick.  At the top, you'll see his projections.  All fifty states matched perfectly.  Not only that, scroll down to his histogram, and you'll see that it's very similar to Nate's.  The mode is 332.  Next comes 347 (most likely giving NC to Obama) and in third place comes 303 (giving FL to Romney).

I've been enjoying my friend's site and eating up his stats and comparing to Nate's stats.  But while Nate's in the spotlight, my friend (who doesn't work for a major newspaper) isn't.

Now that you've compared the results of three different projections, what do all three of these have in common?

Amazing accuracy to predict the actual outcome, and the reliance on POLLS.

While Nate and Patrick and others should continue to do what they do and produce cool stats, let's give credit where credit is due and let's acknowledge where the true predictive power comes from: the POLLS.

Update 11/12/2012:  After having seen videos of Nate Silver after the election and seeing that he is not gloating, I would like to add that Nate appears to be a wonderful person and a professional mathematician.  Please note that I do not believe that Nate made any errors in his projections, and neither did he use faulty methods.  

It's just that the one feat of predicting the point estimate of each of the 50 states was actually the easiest thing to predict, as the polls already had this covered.  Anyone could have taken the average of the latest major polls in each state, add up the electoral votes, and arrive at the same "correct" prediction.  That part isn't particularly impressive.

But if you haven't already, I invite you to dig into Nate's blog and look at all the other cool stats.  It's very difficult to gauge the accuracy of what "could have been" but you can be impressed with all the complexity and coolness.

And then visit my friend Patrick's blog, whose model isn't quite as complex, but is still nonetheless pretty cool.

I'm Willing to Give Obama Another Try

With four years of gridlock and stagnant economic growth, Obama somehow pulled it off.  He won reelection, and now he will be our leader for another four years.

I stayed up late to listen to Romney's concession speech.  He gave a speech similar to John McCain's four years ago.  A few excerpts ...
The nation, as you know, is at a critical point. At a time like this, we can’t risk partisan bickering and political posturing. Our leaders have to reach across the aisle to do the people’s work.
... We look to job creators of all kinds. We’re counting on you to invest, to hire, to step forward.
And we look to Democrats and Republicans in government at all levels to put the people before the politics.
I believe in America. I believe in the people of America.
It's basically a call to support the elected leader.  Work together to form mutual solutions to benefit the people.

And then Obama gave his acceptance speech.  The words he read are good and full of promises that would lead our country in the right direction.  Especially promising are his ideas of working together.  A few excerpts ...
I just spoke with Governor Romney and I congratulated him and Paul Ryan on a hard-fought campaign.
We may have battled fiercely, but it’s only because we love this country deeply and we care so strongly about its future. From George to Lenore to their son Mitt, the Romney family has chosen to give back to America through public service and that is the legacy that we honor and applaud tonight.
In the weeks ahead, I also look forward to sitting down with Governor Romney to talk about where we can work together to move this country forward.
... Now, we will disagree, sometimes fiercely, about how to get there. As it has for more than two centuries, progress will come in fits and starts. It’s not always a straight line. It’s not always a smooth path.
By itself, the recognition that we have common hopes and dreams won’t end all the gridlock or solve all our problems or substitute for the painstaking work of building consensus and making the difficult compromises needed to move this country forward.
But that common bond is where we must begin. Our economy is recovering. A decade of war is ending. A long campaign is now over.
And whether I earned your vote or not, I have listened to you, I have learned from you, and you’ve made me a better president. And with your stories and your struggles, I return to the White House more determined and more inspired than ever about the work there is to do and the future that lies ahead. 
I really hope that Obama has become that "better president," as if he remains the same, the predictions I spelled out earlier will play out.  If instead, Obama reaches out across the aisle as he promises, then some of those losses can be mitigated.

Since Obama seems sincere, I'm willing to have hope that he will do what it takes.  Perhaps we'll all survive these next four years.  But then again ...

Four years ago, Obama gave a similar acceptance speech.  A few excerpts ...
I just received a very gracious call from Sen. McCain.  He fought long and hard in this campaign, and he’s fought even longer and harder for the country he loves.  He has endured sacrifices for America that most of us cannot begin to imagine, and we are better off for the service rendered by this brave and selfless leader. I congratulate him and Gov. Palin for all they have achieved, and I look forward to working with them to renew this nation’s promise in the months ahead.
... Let us resist the temptation to fall back on the same partisanship and pettiness and immaturity that has poisoned our politics for so long. Let us remember that it was a man from this state who first carried the banner of the Republican Party to the White House –- a party founded on the values of self-reliance, individual liberty, and national unity. 
Those are values we all share, and while the Democratic Party has won a great victory tonight, we do so with a measure of humility and determination to heal the divides that have held back our progress.  As Lincoln said to a nation far more divided than ours, “We are not enemies, but friends…though passion may have strained it must not break our bonds of affection.” And to those Americans whose support I have yet to earn -– I may not have won your vote, but I hear your voices, I need your help, and I will be your president too.
These are great, yet very familiar words.  If anything, I sense a little more passion in his 2008 speech.  At first, I liked Obama, and I believed him when he said he was going to usher in a new age of bipartisanship.  I had hope. 

And yet, I'm scratching my head as to why Obama seemed to do the exact opposite over the last four years.  As soon as he got in office, he told the Republicans, "I won, you lost."  He continued blaming Bush with everything under the sun, and attempted to discredit Republican-leaning establishments, and needlessly vilified several parties (including the US Supreme Court during his first State of the Union address). 

Was Obama lying about bipartisanship in his 2008 speech?

Then there was hope again in early 2010 when a special election gave us Scott Brown, the 41st Republican Senator.  With this election, Health Care Reform appeared to be dead in the water because of the likelihood of a filibuster in the Senate.  For a brief instant, Obama looked sincerely humbled as he announced that he was going to have to work with the Republicans to get Health Care passed.

But that's not what happened.  Nancy Pelosi and others convinced Obama to allow them to take a different path and to bypass Republicans entirely through the reconciliation process.  Again, it appears Obama was lying about wanting to reach across the aisle.

After the fact, Obama "listened" to Republicans and vowed to pursue health care tort reform.  And last I heard, we're still waiting for anything to come of it.  I guess that's what you call "listen and ignore."

So, how does the saying go?  Once burned, twice shy?  I hear the words coming out of Obama's mouth in his 2012 acceptance speech, and again I'm hoping that he'll really follow those words this time, but I'm not so optimistic as before.  This time, words alone won't cut it.  I'd like to see some real action this time.  Show us some real bipartisanship.

For example, if Obama is listening to the public, he'd notice that in the CNN exit polls, 49% of those polled believe that the 2010 Health Care Reform Law should be repealed either in part or in its entirety; while 44% believe it should stay the same or be expanded.  If Obama is truly listening to his constituents, then he'd realize that the Law at least needs to be revisited.  If Obama and Congress would do this, then that would show me that Obama really means what he says about bipartisanship.

But let's see how Obama's doing so far after winning the election (talking about wanting to raise taxes on the rich)...
"On Tuesday night, we found out that the majority of Americans agree with my approach and that includes Democrats, independents and a lot of Republicans across the country..."
Ouch!  I really hope we're not in for four more years.  Obama--prove me wrong!

Saturday, November 3, 2012

Obama's Going to Win and We're Screwed

With Obama almost certain to gain a victory, I'd like to take this time to make a few predictions as to what we're likely to see over the next four years.  And also to broadcast why I'm not voting for Obama, and why I'm not jumping on the bandwagon that will contribute to what's about to happen.

Four years ago, Obama made a lot of promises.  Now in 2012, many people are still out of work.  People are still paying high taxes.  They are still paying high costs for healthcare, or still not able to afford it.  A lot of people are disappointed.

In the current election, Obama is making the same promises and then some.  It's as if he's doubling down on his promises, and for some strange reason, it appears to be working.  There are millions are people saying, "The last four years have been disappointing, but I'm voting for Obama again anyway."

This sentiment is echoed in yesterday's idiotic endorsement from the Economist.  Even though they admit that Romney gave a spark of hope of being that better president in the first debate, they'd rather "stick with the devil" they know and reelect him.  I really don't understand this.

So, what's going to happen over the next four years?  More of the same, only worse.

Obamacare is going to do the most damage.  When it goes into full force in 2014 (only a year and two months away), people are finally going to understand what's in this plan, and they're going to be screaming.

The poor who make just enough money to be ineligible for subsidies are going to say, "You mean we have to pay for it?  We can't afford it."  Some will elect to take the annual tax (it's not a fine as per the Supreme Court) because it'll be cheaper.

Businesses are going to cut jobs and/or cut down employee hours to be below 30 hours to get around the requirement to provide healthcare.  There are already businesses seriously considering this TODAY.  When this actually begins to be a common practice, Obama will then begin an initiative to punish any businesses engaging in these "evil" practices and all hell will break loose, while sales of Atlas Shrugged will go through the roof.

Insurance companies will be forced to keep their rates at an artificially low level--so low that in a few years, the cash flow coming in will be insufficient to pay out claims.  These companies will either choose to stop writing health insurance, or just go insolvent.  Since future insurance bailouts are a definite no-go, this will ensure the introduction of the public option, which will eventually become the ONLY option, and the national anthem will be officially changed to be "O America."


Unemployment is going to continue to be a big issue.  It's going down now due to natural economic forces despite Obama's anti-corporation policies.  It may even get down to around 6% in 2013, but with Obamacare and higher taxes on the rich and small businesses on the docket, I expect unemployment to creep up again, and wouldn't be surprised to see it top out over 11% before 2016.

It's going to be called a Triple Dip recession.  I consider myself to be very fortunate to have kept my job during these tough times, but I have actual fears that I may not survive the next dip.  A vote for Obama could be voting me out of work.

Obama remains the King of Deficit Spending.  Keynes would have been proud of of his accomplishments.  The graph above shows the federal government's budget surplus or deficit through the years (unadjusted for inflation).  The biggest surplus happened during the Clinton years.  Bush had a pretty sizable deficit.  But see that big dip down to 1.4 Trillion?  That's Obama.  He didn't just "inherit" such a large deficit.  He CREATED it.  And Obama's nonchalant attitude on the Letterman show when asked about the deficit is very disturbing.  He said he didn't know what the national debt was and that "we don't have to worry about it in the short term."

What will happen in the next four years?  Will he continue not caring?  Are we to be the next Greece?  Some experts say our debt is actually healthy, but I don't know.  If we had to handle that large a debt by percent personally, we'd probably have to declare bankruptcy.

The Feds can print as much money as they need.  Print too much and the dollar becomes worthless.  Hyperinflation could become a reality.  In such an environment, we would have to be paid daily and spend that money immediately or lose it.  People would burn dollar bills just to stay warm.  Exciting!

Fortunately, experts predict the Feds will step in and not let this happen.  It definitely wouldn't happen in the next four years.  But what this does mean is that there will come a time where the US can no longer do any "Quantitative Easing" and there will be no further recourse to delay our debts.  This will invariably lead to higher taxes.

Iran will get even closer to building nuclear weapons.  Obama says that he's doing enough to stop this from happening, but I'm not convinced.  Romney appeared to much more concerned about this than was Obama in the third debate.

Also, as was evidenced in that debate, Obama seems unwilling to handle issues "all over the map."  He wants to handle one issue at a time.  He wants to remove our troops out of Afghanistan by 2014, no matter what.  His business-like approach to accomplish this concerns me, as it doesn't take into account any adverse situations that may arise between then and now.

Obama would rather bring our troops home and put them to work building bridges and schools.  (He actually said this in the third debate, and I'm surprised no one has jumped on it.)

It would be great if we could live in this imaginary world of peace, but unfortunately, the world is in turmoil.  If we withdraw completely, we do so at our own risk.  We can't count on a live and let die approach.  Our enemies will attack no matter what we do, and the question is, are we going to be ready?

There you have it ... my predictions.  In a nutshell, four more years of disappointment.  We will all witness the continuing failures of trickle-down government.

It'll be fun to come back to these predictions in 2016 and see how many came to pass.

And should Romney somehow win WI or PA or OH and squeak out a win, it'll still be fun to see how many of these predictions still come to pass despite how great I think Romney would be.  Or how many things would actually get worse.  But alas, Romney's chances to win wane daily now.

What gets me is, I don't think that these predictions are too hard to see.  I see several different people yelling these concerns as loud as they can, while a majority of the people close their ears and hold their nose while they vote for "more of the same."  I wish they could understand exactly what they're getting before it's too late.  I'd like to avoid this great call to impeach Obama when there exists no impeachable acts that he committed.

So why are so many people voting for Obama despite all these negative indications?  I think the answer comes down to one simple word: greed.  I'm not talking the "Wall Street" type of greed, but rather the "entitlement class" type of greed.  Everyone that's voting for Obama has been promised something.  But yet, when I try to pin down Obama's plan to deliver, it seems like nothing but a bunch of empty promises.

Obama promises to tax the rich more, but is very unclear as exactly how this will benefit the poor.  He mentioned in one of the debates that he already gave the middle class a tax cut, but I do my own taxes, and I didn't get one.  The only new "tax cuts" I can think of were two recent temporary measures: a "Make Work Pay" benefit of $800 a year per household for two years, and a Social Security tax holiday of 2% over the past two years.  If these were tax cuts, then they wouldn't be going away after two years.  Obama's current tax plan does absolutely NOTHING to cut down taxes on the poor and middle-class.  It is simply to increase taxes on the rich.  At least Romney's tax plan would reduce taxes on the poor and middle class, so I'm really at a loss as to why people think they're better off with Obama on this issue.  In four more years we poor and middle class people are going to be paying the SAME taxes (plus the "I can't afford medical insurance" tax I mentioned above), and we are still going to be crunched.

Obama promises that women will be better off with him as president.  These last couple of weeks, he and his ads have been bringing up abortion and equal employment and so on.  But what exactly can Obama deliver?  Abortion is already legal and is here to stay, and the president, whoever he may be, would have little power to change it.  And by the letter of the law, women already have equal employment opportunities.  There is still a question of practice, but again, there is very little a president can do.

Obama now officially supports gay marriage.  He announced this only a couple of days before picking up major contributions from gay donors at an already planned Hollywood fundraiser.  And yet, can anyone name one thing that Obama promises to do for gay people?  Don't they realize they're being played?  They're only going to be irate in four years when there still isn't a federal law enforcing the acceptance of gay marriage.

Obama promises citizenship to illegal immigrants.  This is an unmet promise from 2008.  He did try to get the Dream Act to pass, but that legislation was problematic.  He also gave an executive order giving a small subset of immigrants citizenship in the past couple of months.  How conveniently close to an election!  The funny thing is that Romney has a much more viable plan to provide an easier path to immigration.  Make them legal and make them pay taxes.  Again I'm at a loss as to what Latinos expect Obama will deliver as he was unable to deliver in the last four years.

So, Obama makes a whole series of empty promises, and he does this well, playing on that natural "entitlement" greed we all seem to have.  In some cases, Romney even provides better options, but he doesn't emanate that same sense of hope that Obama's good at doing.

So, yeah.  Obama's going to win, and we're all screwed.