Why REMAIN, even at the very tight odds currently available, is a value bet

Why REMAIN, even at the very tight odds currently available, is a value bet


A guide by Alastair Meeks on betting on the overall EURef outcome

Given the amount of heat that has been generated by the EU referendum, there has been surprisingly little discussion about the actual chances of the main event.  It’s time to put that right.

At the time of writing, Remain is 1.31 on Betfair (a 76% chance)   I understand that the conventional bookies have seen Remain overwhelmingly favoured at all stages despite the short odds offered.  Should you be doing the same?

The polling

The polling is utterly confusing.  If you follow the online polls, the two sides are neck and neck with Leave having a small and perhaps growing lead.  If you follow the telephone polls, Remain has a substantial lead, perhaps growing.  They can’t all be right (though they could all be wrong).

Do we have any clues as to which to place most weight in?  The polls did pretty well in the election round in early May, suggesting that the pollsters have made great progress in addressing the problems they ran into this time last year.  But choosing which party to vote for is very different from choosing sides for an idea, especially one that cuts across party lines.

Online polls are composed from panels, so we can expect their panellists to be disproportionately interested in politics.  That implies that Leave would probably be too high, given that opposition to the EU energises a particular type of politically-engaged voter.  Set against that, telephone polls have sampling problems of their own – the response rate is very poor nowadays and so those who actually respond are unlikely to be particularly typical either (though it is harder to predict in what ways they might be atypical).

Might telephone polls be finding too few rightwing voters?  What are we to read into the implausibly high turnout estimates that the polls are producing?  Might “respectable” Leavers be more reluctant to reveal their views to telephone pollsters than online?

Anyone sensible is proceeding with great caution here because the pollsters themselves are pretty open that they aren’t sure what is going on.  Personally, I am working on the theory that the disproportionately-engaged online panels are overstating the Leave vote making them more inaccurate, but I am doing so warily.

The BES commissioned one of their studies and this suggested that Remain have a very small lead.  While it is a little old, I take this very seriously indeed.  So should you.

The dynamics of the campaign

Remain are rigidly sticking with their theme of the risk of voting Leave, issuing daily blood-curdling warnings about the possible effect on the economy and the risks to security that it would entail.  They are evidently going to carry on doing so for the next month. This strategy will have one of three outcomes:

  1. The public will be too terrified to go to the polling booth for fear of being hit by an asteroid.
  2. The public will regard the claims as wholly laughable.
  3. The public will decide that Leave is risky (even if it isn’t as risky as David Cameron and the economic glitterati are suggesting).

My expectation is outcome three.

Leave is less predictable.  They have been trying to focus on the ability to control immigration if we leave, but wandering off onto historical disquisitions of doubtful historicity and still more doubtful political utility.  Because their campaign is less disciplined, they risk squandering the advantage they have on immigration by being diverted onto less fertile territory.

The public aren’t suddenly going to have a Damascene conversion either way.  The polls have been pretty static all year (once you subdivide them into phone polls and online polls), with movements being quite marginal.  To the extent that they break one way or the other, I expect them to break towards safety.  Unless Leave can talk up the risks of immigration as effectively as Remain have talked up the economic risks, I expect any movement to be towards Remain.

The mood music of the camps

It is fair to say that neither camp has exuded an image of confidence.  Remain’s warnings have been shrill, while Leave have issued wild attacks on the integrity of those voicing inconvenient views.  Both Nigel Farage and Boris Johnson have been lured into discussing a rerun of the referendum if Remain secures a narrow victory, which suggests that they feel that the campaign is ebbing away from them.

The lack of confidence in both camps and the impression that Leave thinks it is behind can be explained by the two sides’ different aims.  Leave wants to get to 50%+1.  Remain wants to settle the debate for a generation.  It is entirely possible that both will be thwarted in their aim and that both believe that on their own terms they will fail.

If you agree, the 5/6 offered by Ladbrokes that Leave will secure over 44.5% of the vote looks fair value, and I’ve backed this bet.  If you’re betting on the main event, anything like 1/4 offered on Remain looks an excellent price and you are unlikely to get much better value in the absence of an unexpected development.  Take it.

Alastair Meeks

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