The sunk cost fallacy is alive and well in the ongoing recount requested by Assemblyman John A. Perez. The former Democratic Speaker of the Assembly claimed a spot on the medal stand for state controller, just 481 votes behind second place’s Board of Equalization member Betty Yee. (The candidate who finished first, Republican Fresno Mayor Ashley Swearengin, is guaranteed a place on the ballot. The Yee-Perez fight is for the second spot on the top-two runoff in November.)

The results were so close — one hundredth of 1 percent — that Perez exercised his right to request and pay for a recount. If the results stand, the race would be the closest statewide candidate race in California’s history.

It’s tough to lose an election. A margin of 481 votes out of 4 million votes cast sets a new standard for electoral agony. But a recount isn’t going to change the outcome. The election is over. Perez lost. A recount only prolongs Perez’s misery and undermines his political future.

Here are seven reasons why Perez should quit while he’s behind.

1. His current 15-county recount won’t be enough.

More important than the current tally is the current error rate, which isn’t high enough to overturn the results. Two days into the recount, 91 precincts have been recounted with Perez gaining at most five votes (Kern: +4; Imperial: +1). Although the sample size is small, the current rate has Perez gaining one vote for every 18 precincts (18.2).

Perez’s recount request only identified 4,103 precincts to be recounted. If our math’s right, after those precincts are recounted, Perez could expect to gain just 225 votes — not enough to change the results. (4,103 precincts / 18.2 current change rate = 225.43 vote gain for Perez)

2. Cherry-picking means the error rate is likely to get worse for Perez, not better.

At the start of the recount, the focus was on Perez “cherry-picking” counties and precincts where he outperformed Yee. “How unfair,” everyone bellowed. Now, the cherry-picking works against Perez. If the current error rate holds, Perez must expand the recount (See Point #1). But the error rate has nowhere to go but down. If he expands beyond the 15-county recount universe, he’s likely to lose votes, or at least see a lower rate of change.

The wisdom of California’s cherry-picking recount law is slowly becoming evident.

3. There’s not enough time to sequentially recount.

In addition to the error rate, Perez could fall short on time. According to a survey of county election officials, the recount — at its current pace — would stretch past the November general election. As first reported by the Sacramento Bee’s Jim Miller, “A new survey by the secretary of state’s office suggests that the recount could run through January if it includes all of the counties sought by Pérez.”

If Perez begins to pick up votes, Yee’s campaign could at “any time during a recount and for 24 hours after it concludes” request her own recount, “as long as it does not include any precincts that were recounted as part of a prior request,” according to the secretary of state’s office.

4. Democrats are betrothed to another.

At this weekend’s executive board meeting, the California Democratic Party officially endorsed Yee for state controller. The endorsement may have been required by party bylaws, but the “rousing welcome” and hospitality suite in Yee’s honor weren’t. Yee is favored among party activists, whose patience is being tried by a destructive recount.

5. He’s blowing through his campaign cash.

John Perez is blowing through his campaign cash faster than Ron Calderon at a golf resort. Recounts are expensive. For years, Democrat Bill Lockyer picked his statewide office and scared away all serious contenders by building a sizable war-chest. Perez tried to do the same thing in the state controller’s race, but his war-chest wasn’t big enough.

Every day the recount continues, Perez’s campaign bank account shrinks. Remember: raising money will be much harder now that he’s no longer speaker or the Assembly.

6. He’s cementing his reputation as a bully.

You don’t get to be the second most powerful politician in California without making a few enemies. The byproduct of Perez’s legacy as one of the most successful speakers in recent history is a reputation as a bully. This recount reinforces that image as a bully. Among some Democrats, Perez’s persistence comes across as him trying to buy (or steal) an election. Right now, Perez’s image as a bully is limited to insiders. That expands to the general public if he reaches the November run-off by an “illegitimate” recount.

7. He’d hate the job of state controller.

The worst outcome: Perez wins the recount and the November election. Perez is a political animal. (We mean that as the highest of compliments.) He thrives in an environment where there is active political conflict. He cuts deals, wields power and builds alliance.

State controller is the farthest thing from a political job. It’s low-profile number-crunching. Perez can’t alter the day-to-day functions of the state’s chief financial officer.

Conclusion: What will John Perez do?

Behavioral economists say that the best way to avoid the sunk cost fallacy is to simply acknowledge it. What are the chances Perez wises up to his self-destructive behavior?

At the beginning of his career, Perez walked away from college because he realized that he didn’t need a degree to be successful. After all that time and effort, Perez had the foresight to realize college was impeding his political career.

So he has done it before.

On Sunday afternoon, Democratic Assemblyman John A. Perez, who finished just 481 votes behind Board of Equalization member Betty Yee in the June 3rd primary, formally requested a recount in the controller’s race. Perez’s recount, which will begin in Kern and Imperial counties, could ultimately span 15 counties and decide which Democrat will face Republican Ashley Swearengin in the November run-off.

“Never in California history has the vote difference between two candidates for statewide office been so narrow, 481 votes or 1/100th of one percent, out of more than four million ballots cast,” Perez said in a statement released by his campaign. “It is therefore of the utmost importance that an additional, carefully conducted review of the ballots be undertaken to ensure that every vote is counted, as intended.”

Perez’s call for a “carefully conducted review of the ballots” is careful indeed. He’s requested a partial recount in 15 counties where he out-performed Yee. That’s in accordance with state law, which allows any voter to request a partial recount that is targeted at the precinct level.

Although the recount can be limited to select precincts, “all of the ballots in all of the requested counties would have to be recounted and the compilation of the recount in those counties would have to lead to a different candidate winning the contest before the results would be recertified,” according to the Secretary of State. 

Yee accuses Perez of “cherry-picking only 15 counties”

Yee’s campaign balked at the partial recount slanted in Perez’s favor.

“Cherry-picking only the 15 counties that he won, and sorting the precincts within the counties to reflect his strongest areas, indicates that he has no interest in a fair and impartial recount,” Yee said.

CalWatchdog.com’s analysis of the county recount list shows Perez’s margin over Yee, ranging from a high of 31 percent in Imperial to a low of just 1 percent in Orange.

1. Kern +10 Perez
2. Imperial +31 Perez
3. San Bernardino +8 Perez
4. Fresno +3 Perez
5. San Mateo +2.5 Perez
6. Orange +1 Perez
7. Ventura +5 Perez
8. Los Angeles +5 Perez
9. Riverside +6 Perez
10. Stanislaus +5 Perez
11. Tulare +7 Perez
12. Napa +8 Perez
13. Kings +9 Perez
14. Lake +7 Perez
15. Merced +9 Perez

The targeted recount can be stopped at any time, because Perez is footing the bill. A statewide recount could cost several million dollars. According to the Secretary of State’s office, if Perez begins to pick up votes, Yee’s campaign could at “any time during a recount and for 24 hours after it concludes” request her own recount, “as long as it does not include any precincts that were recounted as part of a prior request.”

That could be in the cards, based on statements from Yee’s campaign, which has criticized the unfair nature of the recount process. “No recount is going to be fair that doesn’t include more counties,” Parke Skelton, Yee’s campaign consultant told KQED’s John Myers by phone Sunday afternoon.

Independent election experts agree with Yee’s complaint, but acknowledge that under state law, Yee’s only recourse is to request her own recount.

“It’s completely unfair unless they do a re-canvass of the whole state,” Jimmy Camp, a Republican political consultant and expert on ballot counting, told CalWatchdog.com last month. “Recounts are a crap shoot no matter what.”

Perez’ strategy: Searching for invalidated votes

So, what is the Perez campaign’s recount strategy?

In addition to limiting the recount to counties he won, Perez requested a review of all unopened, rejected vote-by-mail and provisional ballots as well as precinct rosters.

“I am also seeking to review all voted ballots that were not counted in the official canvass, including unopened rejected vote-by-mail (‘VBM’) ballots and provisional ballots, and any relevant information related to those ballots, including, but not limited to, all VBM and provisional ballot envelopes containing each uncounted or rejected ballot, all precinct rosters, and any other materials related to the uncounted or rejected ballots,” Perez wrote in his recount request to the Secretary of State.

That falls in line with the predictions of an election expert CalWatchdog.com consulted last month. “One of the goals of any recount would be to get more of your supporter ballots counted,” Paul Mitchell, vice-president of Political Data, Inc., a company that specializes in election data, told CalWatchdog.com. “So, this could mean going into counties where there is a large potential for ballots that were disqualified because of signature problems, and digging through those to find any that can be challenged.”

It’s unlikely such a strategy will prove fruitful in Los Angeles County. Perez’s campaign already closely scrutinized the counting of late absentee and provisional ballots in his home county. Even Perez’s campaign acknowledged Los Angeles as a lower priority, ranking it eighth in the order of recount counties.

Potential to flip outcome, but unlikely

What are the chances that the outcome will change?

In recent years, California has seen two recounts in statewide propositions. In July 2012, a Bay Area surgeon requested a recount for Proposition 29, a $1-per-pack cigarette tax increase defeated by voters. In Dec. 2012, a recount was requested for Proposition 37, a food labeling initiative that was also defeated. Neither outcome changed with the recounts.

However, those results weren’t nearly as close as the current state controller’s race. A study by the Center for Voting and Democracy analyzed statewide recounts from 2000-2009. According to the study, “In the five cases in which the total votes cast were above two million, the margin shift was on average 0.016% of the vote (fewer than one for every 6,400 votes cast).”

With more than 4 million votes cast in the controller’s race, that tiny margin, 0.016 percent of the vote, would be 646 votes. As Yee’s campaign consultant has pointed out, that figure should be expected to be spread among not just Yee and Perez, but all six candidates who were on the ballot for controller.

“It would be strange indeed for Perez to pick up every vote in a recount with multiple candidates,” Skelton, Yee’s consultant, has said.

While the rest of us nurse our election night hangovers, the partner with GoCo Consulting is usually on his way to a registrar of voters office to monitor ballot counting for a race that remains undecided. In 2007, Camp oversaw the recount in which Janet Nguyen flipped the results to become Orange County’s youngest county supervisor. As rare as recounts are, that alone makes him an expert witness.

Here at CalWatchdog.com, we’re closely monitoring the too close to call race for state controller. We were the first to predict that the race was likely headed for a recount. As of Wednesday, June 25 at 4:00 a.m., Board of Equalization member Betty Yee holds an 865-vote lead over Asm. John A. Perez, with just three counties and a grand total of 6,167 ballots left to count in the state. Lake County, which holds 98 percent of the remaining ballots, will decide which Democrat claims the final spot in the November run-off against Republican Ashley Swearengin, who finished first and already is guaranteed one of the two slots on the ballot.

But before that happens, a recount is all but certain. To help explain the ins and outs of a recount, Camp shares his five observations on recounts. 

1. There’s no rhyme or reason to it.

If someone says they have a strategy for winning a recount, Camp says they’re lying to you.  “There’s no rhyme or reason to it,” he says. “Recounts are a crap shoot no matter what.” That’s especially true at a statewide level, where you can pick and choose which counties to recount. “What do you do?” In the controller’s race, Camp says Perez might theoretically start recounting in Los Angeles where he did the strongest. Then again, Camp could easily make the argument for the opposite strategy. That’s because…

2. Human error is the biggest factor.

Human error is the single biggest factor in a recount, according to Camp. “There’s no bias, it’s usually just incompetence,” he says. Statistically speaking, mistakes are inevitable. And changes aren’t due to malicious acts by registrars of voters. With 4 million votes, a few hundred tabulated ballots is well within the realm of statistical possibilities. How do you know which registrar of voters — which county– is more likely to have experienced errors, and more importantly, which candidate benefited from those errors? Camps says you don’t.

Recounts are rare, but the best information we have comes from a study by the Center for Voting and Democracy, which analyzed statewide recounts from 2000-2009. According to the study, “In the five cases in which the total votes cast were above two million, the margin shift was on average 0.016% of the vote (fewer than one for every 6,400 votes cast).”

3. Start: We’re down. Stop: We’re ahead.

At a statewide level, California’s recount procedures allow candidates to pick and choose where and when the recount happens. “You can start in a certain county, and then stop,” Camp says. That means candidates could go into a county, start counting, hope the results flip, and then stop their recount. Of course, then the previous winner could restart their own recount in another county and hope the results once again flip back.

4. Recounts are completely unfair.

All of this picking and choosing makes recounts in California unfair. “It’s completely unfair unless they do a re-canvass of the whole state,” Camp says. That would be expensive, and under state law, it’s the requester who must pay. Perez raised more money for his controller campaign, but Yee is an important voice for the state’s Asian American community, which could raise the necessary funds to keep her competitive with Perez.

5. Practice the phrase, ‘Your honor’

Because recounts are “completely unfair,” Camps concludes, “It all gets challenged in court.” That means this race ain’t over even after it’s over and recounted. And that could be very bad for Democrats. An extended recount and ensuing court battle will only exacerbate the divide between Perez and Yee supporters.

Whichever Democrat wins will be deemed illegitimate by the losing side. Asian Americans, who see their influence waning, will be especially jaded if they believe Perez stole it in a recount.

As of Monday morning, two Democratic candidates were locked in a statistical tie for the second spot in the November run-off, with another candidate very close behind. Board of Equalization member Betty Yee was 351 votes ahead of  Assemblyman John A. Perez – 751,691 to 751,340. That’s a lead of 0.0001 percent.

Both have 21.7 percent of the 3.5 million votes counted for far. Each hold a slim lead over longshot GOP candidate David Evans. He has 740,576 votes, or 21.3 percent.

Republican Fresno Mayor Ashley Swearengin is comfortably atop the field after running up the score in her hometown. Under California’s top two primary system, two Republicans could make it to the November runoff, leaving the state’s 7.7 million Democrats without a candidate.

Too close to call: 926,000 ballots yet to be counted

But before Republicans pop the champagne, election officials must review 926,069 unprocessed ballots, including nearly three-quarters of a million late absentee ballots. With so many ballots left to count, it’s anyone’s race to win. After all those late absentee and provisional ballots are counted, more likely than not, the race will remain as close as it is today.

That’s because the counties with the most unprocessed ballots are almost evenly split among the three candidates. And those top six counties account for roughly 54 percent of all unprocessed ballots statewide. In Perez’s favor, Los Angeles County continues to hold the largest cache of unprocessed ballots, where he bested Yee by 5 percent. Yee did better in Bay Area counties, which are a combined equivalent to Los Angeles.

California recounts: A short history

In 2011, California Watch’s Lance Williams scoured the archives, maintained by Dave Leip’s online atlas, and compiled the state’s definitive history of close elections.

The closest statewide candidate race occurred in 1990, when former Republican Rep. Dan Lungren defeated San Francisco District Attorney Arlo Smith, a Democrat, by 28,906 votes to become attorney general. According to Williams, Smith considered a recount of the 0.39 percent margin of victory.

Lungren’s “landslide” win wasn’t the closest election in the modern era. According to Williams, a 1988 transportation bond measure, which was supported by Gov. George Deukmejian, lost by 355 votes — out of more than 5.2 million cast. That’s a 0.006 percent margin of victory.

In both of those close contests, the losing side did not request a recount, and according to California Watch’s 2011 research, there had never been a statewide recount in California’s history up to that point.

The following year, California experienced two recounts in statewide propositions. In July 2012, a Bay Area surgeon requested a recount for Proposition 29, a $1-per-pack cigarette tax increase that was defeated by voters. In December of that year, a recount was requested for Proposition 37, a food labeling initiative that was also defeated.  Neither outcome changed with the recounts.

Could the current race for controller, which might be decided by a fraction of a percent, be the very first recount in a statewide candidate race?

Get ready for a recount

Odds are there will be at least a partial recount. Under California’s Election Code, Section 15620:

“If an election is conducted in more than one county, the request for the recount may be filed by any voter within five days, beginning on the 29th day after the election, with the elections official of, and the recount may be conducted within, any or all of the affected counties.”

The key wording: “The recount may be conducted within, any or all of the affected counties.” That means that if the current margin holds, it’d be in the best interest of both losers to request targeted recounts in a select group of counties.

Democrats hold recount advantage

The biggest obstacle to a possible recount is financial — the requester foots the bill. Consequently, Perez, who raised the most money in the primary, is more likely than Evans, who spent less than $1,000 on his campaign, to have the financial means for a recount. Yee, too, could likely raise cash from her supporters to pay for a recount. She’d remain the highest-ranking Asian woman in California if elected as the state’s CFO.

Either way, with two candidates and unlimited party resources, Democrats have the advantage in almost every possible recount scenario, but one.

If one Democrat makes it into the second spot once the results are final, will California Democrats allow the loser to request a recount and thereby risk delivering victory to Evans?

Yee’s 351-vote lead over Perez is microscopic in an election involving millions of votes. If that margin remains even close to the same after the remaining ballots are processed, this race ain’t over even when it’s over.