Damian Lyons Lowe – Political Risk, Financial Services
Damian Lyons Lowe is the founder & Chief Executive of Survation, a London-based market research agency which is also a leading political polling company. Survation is a non-aligned polling company and has worked with most political parties and numerous campaigns in the UK.
Prior to founding Survation in 2010, Damian spent 12 years in specialist financial research as a director of global research at specialist research providers Cowen & Company and Thomas Weisel Partners, and also at investment banks Societe Generale, and Jefferies & Company.
Within the financial services sector, Survation has an active business assisting banking and asset management clients with political risk, especially in relation to national elections and referendums through consulting, polling, exit polling, seat and government formation models.
Survation prides itself on its reputation for accuracy. Survation was the most accurate polling company in the 2014 Scottish Independence Referendum – a key event for Sterling – and enjoyed notable recent success at the UK General Election last July.
Much derided ahead of the election, Survation was the only polling company in the industry to forecast the “hung parliament” that ensued, forecasted not once, but in three final published polls, and one private “MRP” model with Dr. Chris Hanretty of Royal Holloway University.
Survation forecast a hung parliament using three different methods – telephone interview, online panel and multi linear regression and post stratification model (MRP). The model work, focused solely on predicting seat wins by party, generated a Conservative party seat projection of 314 – the same seat forecast for the party which the official exit poll later produced.
Survation is developing and extending these different approaches to elections to other countries, which should have broad investor interest as such elections can impact economic outlook, currency, debt and equity markets.
As well as topics such as experiences and lessons learned from the UK Brexit vote and continuing coverage, Damian will be able to speak to Survation’s next election projects – the forthcoming highly complex and contentious Italian General Election this March 3rd and the 2018 US mid-term elections.
Damian is a regular broadcast contributor during elections on Bloomberg, CNBC, BBC and Sky News and were selected to be ITV’s polling company for the 2017 General Election.
Past Election Coverage
Scottish Independence Referendum 2014
UK General Election 2015
The UK’s EU Referendum June 2016
Italian Constitutional Referendum December 2016
UK General Election 2017
Italian General Election March 2018
US Mid-Term Elections 2018
On the 4th March Italy will hold a general election. This note describes the current political situation, the electoral system that will be used in the election, the current strength of the parties, and why detailed polling and modeling is needed to understand the range of likely outcomes.
The last Italian general election was held in February 2013. In that election none of the three major groupings (centre-left, centre-right, and the Five Star Movement) won a majority. A grand coalition of centre-left and centre-right was formed under Enrico Letta (centre-left). Parts of the centre-right withdrew from the government, and a more left-leaning government was subsequently formed under the leader of the Democratic Party, Matteo Renzi. This government lasted until December 2016, when Renzi resigned following the failure of a constitutional reform proposal in a national referendum. For the last year the Italian government has been led by Paolo Gentiloni (Democratic Party).
There are currently six main parties in Italian politics. They are grouped here according to their current vote share in the polls:
- Movimento Cinque Stelle (M5S; Five Star Movement), a populist party which competed for the first time in the 2013 elections, and which was founded by the former comedian Beppe Grillo. Grillo is ineligible to stand for Parliament. The party’s candidate for Prime Minister is Luigi di Maio, who is also the party’s principal spokesperson in the lower chamber of Parliament.
- Partito Democratico (PD; Democratic Party), the main centre-left party, which has been in government since 2013 and which continues to be led by Matteo Renzi.
- Forza Italia (FI; Forza Italia), one of two large centre-right parties, founded and led by Silvio Berlusconi. Berlusconi is not presently eligible to stand as a candidate for election. It is unclear who the party will propose as its prime ministerial candidate.
- Lega Nord (LN; Northern League), a regional separatist party led by Matteo Salvini. The Northern League has grown considerably under Salvini, and is now competitive in many more parts of Italy than previously.
- Liberi e Uguali (LU; Free and Equal), a left-wing splinter group of the Democratic Party which has attracted support from others on the left. The party’s reluctant candidate for Prime Minister is the President of the Senate, Pietro Grasso.
- Fratelli d’Italia (FdI; Brothers of Italy), a radical right-wing party led by Giorgia Meloni, and the latest incarnation of the post-fascist right in Italy.
These are the main parties, but other smaller parties exist and may ally with these parties to form electoral coalitions. The centre-right (FI; LN; FdI) is likely to present itself as a single electoral coalition. The centre-left (PD; other small centre-left parties) will do the same. The M5S and LU will likely contest the election on their own. The current strength of the parties, and their respective coalitions, is shown in Figure 1.
Vote shares of parties (left panel) and coalitions (right panel). Right coalition includes Forza Italia, Lega Nord, Fratelli d’Italia, and other right wing parties. Left coalition includes the Partito Democratico and other left wing parties.
A new electoral system will be used for the March election. This system is a mixed system which combines single member districts and (regional or national) party lists. Unlike some mixed systems, voters do not get to express two preferences (for a candidate and a party respectively). Instead, they vote for a candidate in a single member district (or for a party supporting that candidate). This vote is then used to distribute seats in the party list component of the election. This is sometimes referred to as a fused vote, or fused ballot.
Candidates in the single member districts may be supported by one or more parties. Voters may either place a cross by the name of the candidate, or by the name of a party supporting a candidate. If voters vote for a candidate rather than a party, the votes received by the candidate are distributed proportionally amongst the party lists which supported that candidate on the basis of their share of the vote amongst voters who voted for parties. An example ballot paper is shown in Figure 2.
Example ballot paper. Voters may either vote for the candidate (blue cross) or the party (red cross). Source: ANSA.
In the single member districts, the candidate with the largest number of votes wins the seat. This is the same in both the lower chamber of parliament (the Camera dei Deputati) and the upper chamber (the Senato). The way in which the remaining list seats are distributed differs between the two chambers.
In the Camera, 232 members are elected in single member districts; 386 members are elected by party lists (on a national basis) and 12 members are elected in single member districts abroad. In order for parties to win list seats, they must either win more than three percent of the vote, or form part of a coalition which wins more than ten percent of a vote. Note however that for the purposes of the threshold and for the distribution of seats, a coalition’s share of the vote is calculated only on the basis of parties which win more than one percent of the vote.
In the Senato, 116 members are elected in single member districts, and 199 from party lists. Parties may win seats if they meet the thresholds which apply for the Camera, or alternately if they win at least 20% of the regional vote. For this reason, and the different franchise used for the Senato (only those older than 25 may vote), the result in the Senate may differ from the result in the Camera.
The current polls, shown in Figure 1, show that no party or coalition is likely to win more than forty percent of the vote. A vote share of around 40% is probably necessary for a coalition to win a majority under this system. Simulations of the likely outcome have suggested that the centre-right would finish as the largest coalition, winning between 38 and 45% of the single member districts, and a proportional share (between 30 to 35%) of the party list seats. This however would not be enough for the centre-right to govern on its own. It might be possible for a grand coalition to form between Forza Italia and the Partito Democratico, but this would depend on how many centre-right members of parliament came from Forza Italia. Since each coalition must decide who it puts forward in each constituency, this cannot be known with any certainty
What can we do to help?
There are two important reasons why it is necessary to commission polling in order to understand the likely outcomes of the election.
First, it’s necessary to commission private polling because Italian electoral law bans the publication of polling fifteen days preceding the election. For this reason, it will not be possible for institutions without access to private polling to forecast the likely outcome of the election.
Polling in the last two weeks of the election will likely be extremely helpful in forecasting the outcome. In the last general election in 2013, the Five Star Movement improved its standing in the polls in the last two weeks of the campaign – a key element to the current election.
Second, it’s necessary to commission private polling because of the nature of the electoral system. Although part of the electoral system is proportional in nature, part is not. It is therefore important to know where parties are strong, and liable to win single member districts, and where they are not. Detailed polling – in particular, polling that makes us of multilevel regression and post-stratification (MRP) to make predictions regarding individual constituencies – makes this possible.
How we will address the complexities
As in the 2017 UK General Election, for our election night model, Survation will be working with Chris Hanretty and Oliver Heath of Royal Holloway University and on a multi-modal Italian MRP model.
Due to the nature of the Italian population we believe that a data collection method for this model that combines online, landline telephone and mobile phone interviews conducted wholly by Survation will be the optimal data collection method for Italy.
This mixed method collection approach proved accurate for the Italian Constitutional Referendum in December 2016, with the advanced modeling this year providing the seat level forecasting required for this exercise – simple national vote share estimates by party, (however accurate) will not be enough to provide guidance ahead of the vote.
We will be able to provide “rolling seat forecast” estimates in the weeks and days running into the election, which should capture and contextualise any changes in public opinion and what that will mean for various governmental outcomes considering the complexities listed above.