W11_APE_Presidential Cost in Indonesia


  1. Problem Definition

How much cost required of running for President in Indonesia? There is no open source for public knowledge and transparency of presidential cost from one candidate to others. In this blog I try to estimate presidential cost for next general election planned in 2014.  

 

Figure 1

Figure 1 Indonesia General Election 2014

 

  1. Identify the Feasible Alternative

Since there is no available record for Indonesia, then I used the cost from United States correlated with gold cost per ounce, burger mac [BMI] and iPhone index. Indeed, my estimate will be not accurate enough since this is parametric estimating that fit with class 5 or 4 estimate level.  

  1. Development of the Outcome for Alternative
  1. United Stated Presidential Cost

The historical data of presidential cost in United States[1] with the projection in year 2014 present in Figure 2:

 Figure 2

Figure 2 Projection United States Presidential Cost in Year 2014

Regression exponential with correlation factor R^2 = 93.8% gives 1,943.41 M-USD for 2014 year.  

  1. Correlation Using Gold Cost per Ounce

Same projection process using available data[2], [3] & [4] for US and IDR gold in year 2014 [for IDR gold taken with Z90] present in Figure 3:

Figure 3a 

 Figure 3bFigure 3b

 Figure 3 USD and IDR Gold Cost Projection in Year 2014

The gold quantity required for presidential election in United States in year 2014 is 1,943.41 M-USD / 1,549.72 USD per ounce = 1.25 M-ounce of gold. The cost required for Indonesia presidential election in year 2014 will be 1.25 M-ounce of gold * 17.22 M-IDR per ounce = 21.6 T-IDR.

  1. Correlation Using Burger Mac Index [BMI]

List of BMI index[5] is always updated per year, and from the graph it shows that produced moving average mode with low correlation factor. For calculation I take the latest BMI index in year 2013 present in Figure 4:  

 Figure 4

 Figure 4 BMI for Year 2014

The cost required for Indonesia presidential election in year 2014 is 1,943.41 M-USD * 5,364.24 BMI index = 10.5 T-IDR.

  1. Correlation Using iPhone Index

Not much historical data available for iPhone, so for the index I take the 4S 16 GB series un-locked with the US and IDR price in year 2013 for calculation present in Figure 5: 

 Figure 5

Figure 5 iPhone Calculation for Presidential Cost in Year 2014

  1. Selection Criteria

My main target is estimating the cost for presidential in Indonesia using three correlations above since in Indonesia we don’t have such kind of information.    

 

  1. Analysis and Comparison of the Alternative

The result from three correlations above present in Figure 6:

Figure 6 

Figure 6 Comparison Estimate of 2014 Presidential Cost in Indonesia

It can be seen that the result comes from iPhone index and gold correlation give close value to 22 T-IDR compare to BMI index. It doesn’t mean that BMI index gives wrong result since each correlation forms in different quantity [ounce of gold, x number of burgers or iPhones].  

  1. Selection of the Preferred Alternative

If I only take the representative value from three results then for Z90 the value of presidential election in Indonesia will be around 22 T-IDR [close with gold correlation].      

  1. Performance Monitoring and the Post Evaluation of Result

For transparency and accountability purpose, the cost required for presidential election should be published since they are expensive. Besides in numbers, they can also form into equivalent gold quantity as gold having purchasing power until now.  

References

[1]opensecrets.org. (2008). Presidential Fundraising and Spending 1976-2008. Retrieved from http://www.opensecrets.org/pres08/totals.php?cycle=2008.

[2]goldpriceoz.com. (2013). US Historical Gold Prices. Retrieved from http://www.goldpriceoz.com/.

[3]indexmundi.com. (2013). Indonesia Historical Gold Prices. Retrieved from http://www.indexmundi.com/commodities/?commodity=gold&months=240&currency=idr

[4]goldrate24.com. (2013). Indonesia 2013 Gold Prices. Retrieved from http://www.goldrate24.com/gold-prices/asia/indonesia/.

[5]bigmacindex.org. (2013). Big Mac Index. Retrieved from http://bigmacindex.org/2013-Big-Mac-Index.html.

[6]osxdaily.com. (2013). iPhone4S Pricing. Retrieved from http://osxdaily.com/2011/10/04/iphone-4s-pricing/.

[7]zonahp.com. (2013). Harga iPhone4S. Retrieved from http://www.zonahp.com/harga-iphone/.

Giammalvo, P.D. (2013). Personnel Communication-Purchasing Power Parity. E-mail 25 & 28 September 2013.

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1 Comment

Filed under Arif P, Week 11

One response to “W11_APE_Presidential Cost in Indonesia

  1. WOW!!! Awesome case study!! I loved your unique approach using all three methods to predict what the cost of the elections will be in 2015.

    BUT

    There is only one small problem…… You should have EXTRAPOLATED your costs out until 2016, then taken the mid point between 2015 and 2016.

    Why? Because you are trying to PREDICT what the costs will be as of the end of June in 2015, correct? That means you cannot use 2014 costs as you calculated but the PROJECTED costs up until June of 2015 (2015 + 1/2)

    I am not going to reject this posting as what you have done has been done correctly but would urge you to create a NEW posting using the same case study and data, but this time, instead of stopping at 2014, project into the FUTURE till 2016 then interpolate to get 2015.5.

    The other part I would like you to show the calculations for is using the three methods, together, with one of them being the best case, one of them being the worst case and one of them being the most likely cost estimating scenario, provide us with YOUR P90 cost estimate of what will actually be spent for the 2015 Indonesian Presidential Elections.

    Make sense? (You are definitely on the right track but not quite there yet….)

    BR,
    Dr. PDG, Jakarta, Indonesia

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