Saturday, June 25, 2016

Brexit - Analysis indicates Referendum may be the Wrong Way for Contentious issues

The world is still trying to come to grips with Brexit - Much has been said and much will be said on this emotive issue over the next few years. This is an event whose impact will slowly but inexorably play out impacting the lives of millions.
Here is an analysis of the referendum results - with some findings which merit serious discussion by all democracies who may think that Referendum is the way to go for all BIG decisions.
My conclusion - Referendum without mandatory voting by All is wrong. Had voting been mandatory - the Brexit referendum results could as easily have been different. A 4 % gap is no gap at all when 28% of the population chose to watch the show from the sidelines.
1. Results were close: Remain: 48.11 % Leave: 51.89 % - the gap between the two: 3.78 %.

The results are available for the 382 different local areas. In terms of sheer count of the local areas voting Leave - the gap appears wider.


2.Voter turnout was high- but anything below 100 % won't do for deciding on such a contentious issue 

While the overall voter turnout at 72.1 % was quite high as voting in democracies go (The last general elections in India had the highest ever voting % for India at 66.38%), it was far short of 100%. Let us understand why even a 72% voting may not be good enough to truly measure the will of the people. The plot below shows the voter turnout versus the absolute gap between the Leave and Remain vote %.


The graphic clearly shows that the Voter Turnout % going down as the absolute Gap between Leave and Remain increases. Thus the more uniform the views of a local area (with a clear majority in favour of Leave or Remain), the lesser is the voter turnout. Thus, the voting turnout is highest when the Leave and Remain voters were almost equally divided (the left hand side of the graphic), and lower where there was a clear gap in either direction. My explanation for this pattern of behaviour is the thinking embodied in all Democracies with "First Past the Post" system. Once a voter knows that her area is predominantly going to vote in a given direction, she may feel that her vote does not count and hence would not go out to vote. This kind of thinking does not work in Referendum when every single vote counts, and local area wins count for nothing individually - there is no MP or Congressman getting elected in the referendum process.
One may argue that a 72% turnout should be able to measure the overall sentiment accurately. This is backed by the Law of Large Numbers thinking - where a truly random sample, though small, can fairly accurately assess the % in favour or against a particular issue. This is why the poll results are reasonably accurate,
For this thinking to work, the 72 % who voted should be no different from the 28% who did not vote. But such was probably not the case in this Brexit referendum, Refer the graphic again, and you can see that the voter turnout % shows a steeper decline in case of Remain than in the case of Leave. These are two different groups, with different levels of commitment to the cause as measured by the voter turnout.

3, Voter turnout % differs for the Leave and Remain groups with consequent impact
The relationship between the voter turnout and the absolute gap (between Leave and Return %) is clear. But the data also shows that the Leave group was more committed and the local areas where Leave had a majority shows a higher voter turnout. This can be seen in the tabulation and graphic below. I have categorised Local Areas with an absolute gap of > 20 % as COMPLACENT, and those with gap of less than 20 % as ENGAGED.


As can be seen above, the Voter Turnout % is overall higher when the voters know that there is a tough fight ahead (Engaged Category - Gap of less than 20 %) than when the voter is complacent knowing that the results in her area is clearly going one way. This behaviour of increased voter turnout is seen in both the Local Areas which voted to Remain and those which voted to Leave. However, the Local Areas where the majority voted to Leave shows a higher voter turnout in each category.This is the key to the final conclusion. The 72 % voters may not be truly representative (in statistical terms) of the 100 % population, and the results could have been different if there was 100 % turnout.
It is standard thinking based on the work done by behavioural economists that losses loom twice as large as gains. In a Zero-Sum game with the population equally divided between those who perceive the outcome as gains and those who perceive it as a loss, it is the group which perceives the outcome as a loss which would be more motivated in putting up a fight. In such a case, the people who actually come out to vote would be skewed in favour of those who perceived the outcome as a loss, and hence not be representative of the population.This pattern would not be so easily discerned in a pre voting poll, but the self-selection bias would manifest itself on the day of the actual voting.
The Graphic and tabulation above shows that the voters in favour of "Leave" ensured a higher turnout. More than the Status-Quo bias, it was the asymmetry of Gains and Losses which finally decided the issue.
If the Leave and Remain groups were equally divided, and the Leave group was 5 % more motivated than the Remain group to go out and vote,(ie, if Remain Group has 70% Voter turnout rate, then Leave group at 5% higher rate would be 73.5% turnout)  then any voter turnout less than 96% of the total electorate would lead to the Leave group winning by 51.2 % against 48.8 %. Only a 100% voter turnout could reveal that the two groups were equal.
This is the problem with Referendum, where the two opposing sides, though having clear views on which way they stand on the issue may have different levels of motivation to go out and vote. Even a 5 % difference in the motivation level and consequent voter turnout would lead to results different from what the population as a whole wants.
Referendums should be used only when voting is made mandatory and near 100 % turnout is assured. I hope that we do not see a spate of referendums in the EU with an outcome which does not truly represent the views of a fairly equally divided population.


Election results data available at the UK Electoral Commission website and can also be downloaded here.