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February 10, 2004
Good grief
Public Health & Research - iHealthBeat

Economists Create Futures Market to Predict Flu Outbreaks

February 10, 2004

Economists at the University of Iowa have created an electronic influenza futures market that could let health officials track future flu outbreaks, the Cedar Rapids Gazette reports. The market could help vaccine producers ensure enough supplies without too much waste, said Forrest Nelson, a UI economics professor who helped come up with the idea for the market.

The Iowa Electronic Markets on Jan. 16 launched the futures market and invited doctors, nurses and other health professionals with firsthand knowledge of influenza levels to buy and sell contracts based on the influenza activity tracked by the CDC.

Each trader was given $100 in fake “flu dollars” that they could use to buy or sell influenza futures contracts from Jan. 18 to Jan. 24 based on what they thought the CDC-reported influenza activity level in Iowa would be. Contracts were color-coded in white/yellow for no activity reported, green for sporadic activity, purple for local activity, blue for regional activity and red for widespread activity.

About a dozen participants traded more than 100 contracts in the first one-week trial. Blue was the highest traded contract at 95 cents per contract. Blue also was the CDC’s reported activity in Iowa that week—an indication that the market could be a useful predictor, the Gazette reports.

The team decided that any payouts would be in the form of grants for professional in-service training instead of cash to avoid criticism that investors could potentially profit from predicting human tragedy. The team has not yet secured funding for payouts (DeWitte, Cedar Rapids Gazette, 2/6).

Is this whole "fake futures" an idea whose time has come or all of these people just weird?

Is there any valid reason why experts with an opinion on where the next flu outbreak is going to happen couldn't just do something radical, like talk to each other? Is it necessary for them to create a board game?

Posted by AnneZook at 12:12 PM


Comments

I belive this is exactly the same idea as the much ridiculed DARPA terrorism futures market. Washington Post wrote at the time:"From the trading patterns, the Pentagon agency, known as DARPA, hoped to gain clues about possible terrorist attacks. In statements Monday and Tuesday, it said markets are often better than experts in making predictions."

I wrote about this at

http://www.karlsson.at/offtoparchives/offtopAug03.htm#becker

(I hope this kind of linking is legal?)

Posted by: Bengt at February 11, 2004 02:23 PM