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Stories by RogerKay on Medium

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A Discontinuity That’s Certain, and Probably Negative
RogerKay · 2024-10-07 · via Stories by RogerKay on Medium

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Simple model for looking at likely economic scenarios under different election outcomes

RogerKay

We are living in odd times. We find ourselves tossed from one calamity to the next, not knowing what to expect. But there is a certainty ahead of us in the next month, the Presidential election, which will definitely occur, but the outcome of which could go a number of distinctly different directions.

This discontinuity presents an opportunity to dare to think the unthinkable and follow each likely path along its expected unfolding. The first bifurcation occurs when one or the other candidate wins the election. I realize there are a lot of asterisks on that (which is part of the story), but it helps to start with a simplified model and add complications later.

I’ve given my own probabilities to the election outcome (Nate Silver and 538 notwithstanding), which puts Harris at 60% likely and Trump at 40%. Call it wishful thinking, or betting that the decent people in the political center are repelled by Trump but too quiet or intimidated to proclaim it. They know they have one vote and will cast it without fanfare. The key to a simple model is that all probabilities are rough and represent heuristics rather than mathematically accurate representations.

Be that as it may, I’m going with a slightly greater likelihood that Harris wins. Thereafter, of course, the two paths diverge strongly.