The Political Economist

When I started working in the academia a few years back, my friend and co-author Josip Glaurdić asked me which journal would I like to be published in the most? Without hesitation I said: Public Choice !  Well, that goal has now been accomplished. I have a publication in one of my all time favorite political economy journals! You can read the paper on this link , it's been published online first. Next big goal: Quarterly Journal of Economics (I will also accept American Economic Review, Journal of Political Economy or American Political Science Review).  Our paper is on the political bias in the allocation of intergovernmental grants in Croatia. Here's the abstract:  "Instead of alleviating fiscal inequalities, intergovernmental grants are often used to fulfill the grantors’ political goals. This study uses a unique panel dataset on more than 500 Croatian municipalities over a 12-year period to uncover the extent to which grant distribution is biased owing to ...

Talk about Black Swans , 2016 was full of them! From elections to markets, from hacking to terrorist attacks, it was one unexpected event after another. Each a complete shocker in its own way. Especially in sports and politics.  Portugal winning the Euro  football tournament, Leicester winning the Premier League , Britain coming in second at the Olympic game medal count , or the Chicago Cubs winning the World Series  were as big as Black Swans as Brexit or Trump.  It goes without saying that a year of Black Swans was a terrible year for forecasters. Even the biggest names of the 'industry' have stumbled and failed to predict the biggest disruptive events of the year: Brexit and Trump. Not my company . We got Trump spot on . Just to remind my readers, we called 47 states including the most important swing states like PA, FL, NC, and OH for Trump. Our unique prediction method , that was further perfected since Brexit, has hit bull's-eye! Our almost perfec...

First of all apologies to my regular readers for not presenting our results here sooner. It's been overwhelming in the past two days - first with the prediction, then with the results, and then with the post-election frenzy.  Anyway, we gave an almost perfect prediction ! Not just a Trump victory, but also all the key swing states (PA, FL, NC, OH), and even that Hillary could get more votes but lose the electoral college vote. Here are our results as I presented them in a Facebook post on the eve of the election: For a more detailed explanation read our blog . The method is described there in greater detail, plus we call all the states. The story got covered first by the academic sources. My own University of Oxford published it as part of their main election coverage , as did my alma mater, LSE on their EUROPP blog . More news coverage soon to come! Details of our prediction  The results nevertheless came as an absolute shock to many, but it was...

My article got published today at the New Scientist ! One of the biggest science magazines in the world. See the text here ( there is no paywall, you just register and read it for free ). It was even on the front page: New Scientist website front page 03 Nov 2106 The text is about the scientific experiment behind our prediction survey . It starts by examining why the pollsters are getting it wrong lately and whether or not there is any science at all behind polling. Then it introduces our prediction survey idea and how we're doing an experiment on US elections to see whether or not science can actually improve polling.  For those who don't bother to register in order to read it on the New Scientist webpage, I have copied the text here (enjoy!): As US election looms, time is ripe for a new science of polling "Growing scepticism about traditional methods for predicting election outcomes is fuelling a search for a more scientific approach to polling, says Vuk ...

Is it possible to have a more accurate prediction by asking people how confident they are that their preferred choice will win? One consequence of this hectic election season has been that people have stopped trusting the polls as much as they did before. Which is surprising given that in the US, unlike the rest of Europe, pollsters and particularly polling aggregation sites (like FiveThirtyEight ) have on aggregate been quite accurate in their predictions thus far. Still, one cannot escape the overall feeling that pollsters are losing their reputation, as they are often being accused of complacency, sampling errors, and even deliberate manipulations. There are legitimate reasons for this however. With the rise of online polls , proper sampling can be extremely difficult. Online polls are based on self-selection of the respondents, making them non-random and hence biased towards a particular voter group (young, better educated, urban population, etc.), despite the efforts of ...

This week my colleagues and I from Oraclum were focused on predicting the outcome of the forthcoming Croatian general election. We did the same thing last year and were not expecting to do Croatian elections again, at least until the local elections in 2017. However, the new government - formed after almost 2 months of post-election negotiations - survived in office for only 6 months. Last year there was no relative winner as the two main coalitions, led by the conservative HDZ and the social-democrat SDP both came tied with 56 seats (76 needed to form government). The biggest surprise was a centrist party MOST which grabbed 19 seats making it the kingmaker party, with a number of smaller parties entering Parliament as well. The new election is to be held this Sunday, and so we ran our unique BASON Survey ( Bayesian Adjusted Social Network Survey ) over the past week to feel the vibe of the voters and make our election prediction. A little bit about the survey before we share ...

After hearing the results of the Brexit referendum on early Friday morning, my initial reaction was this comment on Facebook: After cooling down over the next few days and reading about Brexit from a number of perspectives, I have to say that everything I said initially - still holds. I will carefully explain each point. First, the democratic deficit problem . This is, sort of, my PhD topic, meaning that I'll be writing quite a lot about it over the next few years. Before explaining why this outcome is a deficit of democracy we must first define the concept of democratic deficit (or perhaps even - democracy failure ). Basically, the democratic deficit concept concerns the interaction between politicians and partial interest groups, a legitimate consequence of electoral competition and political freedom to express and fight for one’s interests, and whether or not this interaction results in adverse economic outcomes (in my PhD I will be focusing on linking the failures of ...

On yesterday’s historic referendum , Britain has voted Leave. It was decided by a small margin, 51.9% to 48.1% in favour of Leave, with turnout at a high 72.2% ( highest since the 1990s ). The outcome dealt a decisive blow against PM David Cameron who announced his resignation in the morning. The markets have had a strong negative reaction, with the markets plummeting , and the pound sharply declining to its 30-year low against the dollar. It was an outcome the markets failed to anticipate (or were hoping to avoid), which explains the investors’ abrupt reaction s. Read the initial reactions:  The Economist is in state of disbelief, trying to find a solution, and describing what happens next (invoking Article 50 of the Lisbon Treaty). They also have this interesting piece on the fallen legacy of David Cameron . The FT dreads about "Britain's leap into the dark" , and keeps warning on the negative economic consequences . Martin Wolf also had a good comment. The BBC...

Our final prediction is a close victory for Remain . According to our BAFS method Remain is expected to receive a vote share of   50.5% , giving it a 52.3% chance of winning. Click to enlarge. Source:  Oraclum Intelligence Systems Ltd.  Our prediction produces a probability distribution shown on the graph above (see explanation to the right), presenting a range of likely scenarios for the given vote shares. Over the past week we have consistently been providing estimates of the final vote share and the likelihood of each outcome. Daily changes and close results simply reflect the high levels of uncertainty and ambiguity following the EU referendum. However our prediction survey (the BAFS) has noticed a slight change of trend in favour of Remain in the past two days. This is why our final prediction gives a slight edge towards Remain, and predicts a vote share of 50.5% for Remain, and 49.5% for Leave (the graph below represents the vote share of Leave...