(OPE-L) Econometrics that Matters - Venezuelan referendum

From: glevy@PRATT.EDU
Date: Wed Oct 20 2004 - 16:57:09 EDT

> From: Mark Weisbrot <weisbrot@c...>
> Date: October 15, 2004 4:02:33 PM EDT
> To: weisbrot111@y...
> Subject: Econometrics that Matters
>  Dear All,
>  For those who like econometrics or statistics, here is a simple
> problem that is turning out to have significant political
> implications. It takes about 20 minutes to read and understand it.   For
those of you who teach econometrics or statistics, it makes an
excellent problem for an introductory class -- an exciting real
> example where the answer to a statistical question has real
> consequences.
>  Perhaps more importantly, it would be good if some of you would be
> willing to weigh in on it. As of now, a paper by two economists
(Hausmann and Rigobón,
> http://ksghome.harvard.edu/~rhausma/new/blackswan03.pdf ) is being  used
to undermine the credibility of a very credible election
> by purporting to show econometric evidence of electronic fraud.
> this referendum was closely monitored and certified by the Carter
Center and the Organization of American States, this paper has also
called into question the credibility of the international
> process.
>  The election in question is a recall referendum that took place on
> August 15 in Venezuela, where the recall effort failed by a vote of
> (NO) to 41 (YES) percent. The opposition put forth exit polls,
> conducted by opposition activists and supervised by the well-known
American polling firm Penn, Schoen, Berland & Associates, that
> the opposite result: that President Chávez was recalled by a margin
> 59 percent (YES) to 41 percent (NO). (These and other exit poll
> were used by Hausmann and Rigobón in their analysis).
>  The econometric model used by H & R is a bit complex (it is
> in the appendices to their paper), but the problem with their
> is actually very simple. Here is a brief outline:
>  In this referendum voters expressed their preference (yes or no)
> a touch screen voting machine. The machine then printed out a paper
ballot with the voter's choice, which voters deposited in a ballot  box.
>  Electronic fraud in this system is thus a difficult and risky
> enterprise: any rigging of the machines could be caught quite
> by comparison with the paper ballots at any polling center. In an  audit
after the vote, the National Electoral Council (CNE),
> with the international observers from the Carter Center and OAS,
> a sample of 150 polling stations and compared the machine results
> the paper ballots. The results matched almost perfectly -- with 0.1
percent difference -- a number that is statistically insignificant
> easily explainable by the likelihood that some voters might have  failed
to deposit their paper ballots.
>  But Hausmann and Rigobón came up with a theory of fraud that is
> consistent with a clean audit. To take their hypothetical example
(p.28-30): suppose there are 3,000 voting centers where the
> are rigged, and the CNE randomly selects the remaining 1,580
> to be clean. The electoral authorities then fix the program that
randomly selects a sample of 150 centers for auditing, so that the
sample is selected from only the 1,580 clean centers. The
> results from these centers would then match the paper ballots, and
> audited sample would show the election to be clean.
>  The problem with this theory is that under these assumptions, the
> audited sample is actually a random sample of the universe of
> (pre-vote, pre-fraud) polling stations. It therefore provides
> statistical evidence, which Hausmann and Rigobón ignored, of the
overall referendum result. And the sample came in very close to the
official result: 41.6 of the audited sample voted YES, to recall
> President. A relatively simple statistical test shows that:
>  -- The chances of getting an audited sample, under Hausmann and
> Rigobón's assumptions of how it was selected, of 41.6 percent YES,
> the true (non-fraudulent) vote were 59 percent YES, are less than
> in 28 billion trillion.
>  -- Even if the true vote had the recall barely succeeding with
> 50.1 percent YES, the chances of getting an audited sample of 41.6
percent YES are less than one in a million.
>  That should be the end of the story. However, after the Carter
> responded  (see http://www.cartercenter.org/documents/1834.pdf ) to
Hausmann and Rigobón, they responded with a new theory of the fraud
(see http://ksghome.harvard.edu/~rhausma/new/CarterResponse.pdf
> 2-3), in which the audited sample might have been not randomly
> selected but deliberately selected to be non-representative. In
> words, it could have been chosen to be very pro-government, so that  the
41.6 percent YES vote in the sample would match the overall
(fraudulent) result.
>  However, this would mean that a very pro-government sample was
> selected for the audit. But there is no evidence of this; and in
> in our paper we looked at the election results from 2000 and found  that
the people in the audited areas voted the same as the rest of
> country in the 2000 election. In that 2000 election, Chávez
> 61.8 percent of the major-candidate vote in the areas audited for
> 2004 referendum, as opposed to 61.4 percent for the country. This
> well within the margin of sampling error.
>  So there is no evidence of electronic fraud and no more reason to
> question the results of this election than there is to question
> Ronald Reagan beat Walter Mondale in 1984, by the same margin.
>  All of this is explained in our brief paper:
> http://www.cepr.net/publications/fraud_venezu_conspiracy.pdf .
>  I want to add that this is not a personal or political dispute
> Hausmann and Rigobón. In fact, Professor Rigobón has responded to
> by e-mail and our correspondence has been useful, interesting, and
friendly. And we continue to take them at their word that they are
> simply trying to undermine the credibility of the electoral
> but indeed believe that an electronic fraud may have taken place,
> that their paper provides statistical evidence of such fraud.
> Nonetheless I am very sure that they are completely wrong.
>  The problem is that, since their paper is a bit complicated,
> no one has read it and understood it. (Although it has had
> considerable influence in the U.S., international, and Latin
> press, and of course also in Venezuela). However it is not
> to go through all of their derivations. Some of you may take the
> to read it, as we have, and to figure out how they might have
> their result in the absence of electronic fraud. However, their
> of the fraud -- outlined above -- is explained on page 28-30 (see
http://ksghome.harvard.edu/~rhausma/new/blackswan03.pdf ); that,
combined with the statistical evidence noted above and presented in  our
paper, is sufficient to make an informed decision on whether
> allegations of electronic fraud should be taken seriously. Anyone
> a basic knowledge of statistics can easily understand everything
>  If anyone in interested in looking at this issue, please contact
> by e-mail or at the numbers below. The Carter Center will probably
> reviewing these allegations again, and the controversy will
> so anyone who is willing to take a little time to understand the
> basic statistical analysis here may be very helpful.
>  Please feel free to forward this to anyone you know who might be
> interested, especially statisticians.
>  Thanks in advance,
>  Mark
>  Name: Mark Weisbrot
>  E-mail: <weisbrot@c...>
>  Co-Director
>  Center for Economic and Policy Research
>  1621 Connecticut Ave NW, Suite 500
>  Washington, DC 20009-1052
>  Phone (202) 293-5380 x228
>  Fax (202) 588-1356
>  (202) 333-6141 (home)
>  (202) 746-7264 (cell)
> www.cepr.net

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