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This case study describes the impact achieved by novel methodology for election exit-poll design and analysis, at the 2010 UK General Election. The context is that the underpinning research had already led to success in predicting the outcome of the May 2005 General Election for public broadcasts by BBC and ITV. Its direct impacts at the 2010 General Election were significant and far-reaching:
(i) The same statistical methods were used successfully in 2010 also by a third major UK and international broadcaster, Sky (in addition to BBC and ITV).
(ii) The TV, radio and internet audiences of the three channels combined totalled many millions of people who were thereby informed of the likely 2010 election outcome immediately after the close of polling stations.
(iii) The prediction that was produced and broadcast at close of polls in May 2010 was both surprising to political commentators and extremely accurate.
As a result of these successes, the statistical methods we developed are now the "industry standard" for electoral exit-poll design and analysis in the UK.
Based on his acknowledged research expertise in the areas of voting behaviour, electoral systems and survey methodology, John Curtice was widely consulted by the media before and after the 2010 UK general election to provide expert predictions on the likely outcome and to explain the results. By engaging with a variety of non-academic audiences, he informed public debate and understanding, and influenced pre-election planning by the UK Civil Service. He also contributed to the election night coverage by the three major UK broadcasters by accurately predicting the final result based on exit poll data. This informed much of the election night coverage, particularly on the BBC.
A series of econometric methods and software, designed by a team of econometricians at Oxford, have been adopted as standard by a large range of governmental bodies, international agencies and businesses. The econometric methods are designed to model and forecast high-dimensional, evolving economic processes facing multiple structural shifts, while the econometric software (PcGive) implements the resulting best-practice procedures. The application of these methods have resulted in more appropriate empirical models, improved robust forecasts, and, consequently, better decision making by these bodies.
Research by Oxford econometricians provided the basis for innovative new methods for predicting periods of potential financial stress and providing protection for investors against extreme events. During periods of financial stress, equity funds tend to sharply lose value while volatility tends to increase. Adding some long volatility exposure to a standard equity portfolio can significantly improve the tail behaviour of a portfolio. However, it is expensive to continually hold volatility contracts due to the volatility risk premium. Researchers at Man Group have applied the Oxford research to create new strategies to protect against tail risk and these are incorporated in their Tail Protect fund launched in October 2009.
General insurers are required to have a capital reserve to cover outstanding liabilities, i.e. liabilities that have been incurred but not settled, or perhaps not even reported. Under the new Solvency II regulation, adopted by the EU Council in 2009, general insurers now face complex new capital requirements. These new regulations must be fully implemented by 2016. The development of new statistical methods led by Dr Bent Nielsen and his co-researchers, in collaboration with the general insurer RSA, extends traditional forecasting methods, and provides tools by which insurers are able to meet these new statutory requirements.
A new procedure for defining UK Parliamentary constituencies was strongly influenced by research led and directed by Professor Ron Johnston of the University of Bristol. The Parliamentary Voting System and Constituencies Act, 2011, created new rules for the redistribution of seats and also reduced the size of the House of Commons from 650 Members to 600. Throughout the proceedings, from initial meetings with the Conservative Party to completion of the legislation, Johnston was a key advisor to all three main political parties, civil servants, MPs (including a House of Commons Select Committee), the Boundary Commissions and members of the House of Lords (in whose debates his advice was cited on several occasions). He co-authored reports, gave oral evidence, and advised individuals. His expertise was called upon by the media during the debates on the Bill, to explain its intricacies and the many amendments. For this work, Johnston received the Political Studies Association's `Political Communicator of the Year' award in 2011.