Did Joe Biden learn a key lesson from the Democrats’ 2016 campaign?

Hillary Clinton’s loss to Donald Trump in the 2016 US presidential race was hugely unexpected – but, argues author and business consultant Annie Duke, that is when you can learn the most valuable lessons

19/01/2021

Juan Torres Rodriguez

Juan Torres Rodriguez

Fund Manager, Equity Value

You may well feel you have had more than enough of US politics for the time being and, if so, our apologies for what follows. As Joe Biden moves into the White House, however, we are prompted by our recent podcast conversation with professional poker player turned author and business consultant Annie Duke to think back to a simpler time – the 2016 US presidential race between Hillary Clinton and Donald Trump.

The subject cropped up when we highlighted a passage in Duke’s latest book How to Decide: Simple Tools for Making Better Choices, which builds on her 2018 best-seller Thinking in Bets. In it, she makes the somewhat counterintuitive argument that outcomes are only truly informative when they are unexpected, as this means someone has failed to account for that possible future scenario.

Asked to elaborate on why this can be so powerful, Duke first mentions the 2015 Super Bowl – an episode she uses to open Thinking in Bets and which we in turn wrote about, here on The Value Perspective, back in 2018. Towards the end of that game, Seattle Seahawks coach Pete Carroll made a decision that is now routinely – and, Duke suggests, unfairly – viewed as one of the worst decisions in the history of sport.

“Once we know an outcome, it really overshadows our ability to judge the underlying decision’s quality,” she explains. “Still more than five years after the game, when I show the video of the play, everybody groans and says, ‘Worst decision in Super Bowl history’. I know myself an objective analysis of that play suggests it was quite a good decision and yet, when I watch the video, I feel it’s bad. I can overcome that but I feel it’s bad.”

The brain as ‘interpreter’

Echoing the view of recent podcast guest, Jake Taylor, that our brain will happily misremember things if it helps us live with ourselves, Duke notes that market strategist, author and another 2020 podcast guest Michael Mauboussin refers to a part of the brain known simply as ‘the interpreter’. “It just goes to work, trying to make the world – to make outcomes – make sense, and you cannot really shut it off,” she adds.

The example Duke offers in How to Decide is the popular take on how and where the 2016 US presidential was won – or indeed lost. “Wisconsin, Michigan and Pennsylvania are three states where Hillary Clinton lost by a combined total of just 80,000 votes – and they turned out to be super crucial,” she says. “That is essentially what lost her the election.

“Since then, of course, you always hear how the decision not to campaign more in those states was obviously wrong and so on – and yet I don’t remember people talking about this at the time. So when I was writing the book, I decided to check – I think my Google search was ‘Clinton’, ‘Wisconsin’, ‘Michigan’, ‘Pennsylvania’ and maybe ‘2016’ – and a gazillion articles came up on how ridiculous her campaign strategy was.

Evidentiary record

“It felt very similar in tenor to the reaction to Pete Carroll’s 2015 Super Bowl call for the Seahawks – although this time it was not just ‘What a terrible mistake’ but also ‘And everybody knew it at the time’. Yet the weird thing is, the very first article I could find that is really hypercritical of the Clinton campaign was dated 9 November 2016, which happens to be the day after the election.

“I actually found two articles from before the election that were hypercritical of Trump for campaigning in Pennsylvania and then there was one article wondering if Trump was outflanking Clinton by campaigning in Pennsylvania while she was focusing elsewhere. Yet that one still concluded she was so far ahead in the polls, she would be fine. And that was it – that was all I could find from before the election.”

The key in this situation, Duke argues, is to be able to put yourself into “the state of knowledge” you were in at the time of a decision – and, handily for her book, few aspects of life receive heavier coverage than a US election campaign. “If Clinton’s campaign mistake was really common knowledge, there certainly would be an evidentiary record of it,” she points out. “But there isn’t.

“Obviously, there was a polling error, which by its nature you cannot know until after the fact and, furthermore, the polling error wasn’t national. The national polls came out pretty exact – and it wasn't specific to all states either because there was all these states where the vote came out exactly as the polls said they would. It just happened that in these three particular states there was some sort of systemic error.”

Lesson to be learned

This brings Duke to the idea of what there is to learn from a particular outcome. “If you are just looking at win or lose, good or bad, the answer is not too much,” she says. “That is because people try to make sense of the world in a way where two things are usually going to happen. First, if an outcome is poor, people tend to assume the underlying decisions must have been poor, which is not necessarily the case.

“And second, any analysis usually ends up with this problem of hindsight bias – people saying, we should have known or we did know or whatever. You can see all of that colliding in this Clinton example – and yet it also shows how we might set about ensuring we can learn from experience because, as I said, there was an evidentiary record.

“Clearly every single political observer was writing a lot about this election and yet not one of them made that particular prediction. So the one thing we know is this was unexpected – these states ended up voting way off the polls – and now we can learn something. Not about whether the decision-making was good or bad but where that error derived from so we can repair that part of the decision-making process for the future.”

Author

Juan Torres Rodriguez

Juan Torres Rodriguez

Fund Manager, Equity Value

I joined Schroders in January 2017 as a member of the Global Value Investment team. Prior to joining Schroders I worked for the Global Emerging Markets value and income funds at Pictet Asset Management with responsibility over different sectors, among those Consumer, Telecoms and Utilities. Before joining Pictet I was a member of the Customs Solution Group at HOLT Credit Suisse.  

Important Information:

The views and opinions displayed are those of Nick Kirrage, Andrew Lyddon, Kevin Murphy, Andrew Williams, Andrew Evans, Simon Adler, Juan Torres Rodriguez, Liam Nunn, Vera German and Roberta Barr, members of the Schroder Global Value Equity Team (the Value Perspective Team), and other independent commentators where stated.

They do not necessarily represent views expressed or reflected in other Schroders' communications, strategies or funds. The Team has expressed its own views and opinions on this website and these may change.

This article is intended to be for information purposes only and it is not intended as promotional material in any respect. Reliance should not be placed on the views and information on the website when taking individual investment and/or strategic decisions. Nothing in this article should be construed as advice. The sectors/securities shown above are for illustrative purposes only and are not to be considered a recommendation to buy/sell.

Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.