Elections are not just turbulent times for voters but for investors as well. Common wisdom has it that equity markets tend to lose some of their froth as the vote gets nearer, and perk up once the policy uncertainty dies down.

Quantifying this risk exactly can be problematic because so much depends on the specifics of the policies being proposed, as well as the intended and unintended consequences should they ever be implemented.

In New Zealand, putting a number to this got a lot easier in 2014 thanks to the proposal by the Labour and Green parties to restructure the electricity market under a single buyer model, a policy that looks set to be shelved in the wake of National’s victory.

The price of that scheme can reasonably be estimated to be between $1 billion to $772 million, based on the rebound in electricity stocks either on Monday morning or at the time this article was written (Thursday).

Had the opposition parties been voted into government and a single buyer model implemented, these figures are the smallest losses that investors would have to wear to deliver energy bill savings of $300 a year that were at best reckoning uncertain, and at worst likely to achieve the very opposite result.

Factoring in the probability of a Labour victory (iPredict: 15%), that means the market was probably pricing the effect on electricity stocks at between $7 billion to $5 billion if the Left had won power.

That is notably high, given that recent market capitalisation for all electricity stocks was $13.4 billion on Friday last week (suggesting that there might be other risks being taken into account).

It is a risk we seem to have dodged for now, but it underscores just how important it is for politicians to weigh the impact of their words carefully.

In this case particularly so, because share price declines in the wake of policy announcement didn’t just hit equity investors, who should be aware of stock market risks, but pensions savers and taxpayers as well, since the state still owns a majority stake in three of these firms.

The turbulence the proposal caused also seemed to fly in the face of statements by Labour in the run up to the election, when the party lamented how New Zealand businesses had been stunted due to shallow capital markets.

As a country we surely want policymakers to have the ability to experiment with new policy ideas, but there should be an awareness of the wider effects and the costs thereof, because it is often the public who have to foot the bill for well-intentioned but poorly thought-out notions.