Hurricane Prediction Market Developed
July 20, 2005 | Washington PostA trio of University of Miami professors are betting on a new way to predict where a hurricane will hit, an unorthodox approach they believe could help people living along the storm's path decide whether to evacuate. The three have founded an electronic futures market that allows the public, students and trained forecasters to invest in shares representing selected coastline spots where they think the hurricane will strike. Those who forecast most accurately will get a payout. David Letson, a fellow economist and associate professor, and David Nolan, assistant professor of meteorology, have developed MAHEM, Miami Hurricane Event Market, with help from trading specialists at the University of Iowa. The Iowa Electronic Markets (IEM) of the University of Iowa has used the tactic to inspire health professionals to forecast where influenza might strike, said FORREST NELSON, an economist and one of IEM's founding directors. Nelson, who is involved in the MAHEM project, expects most hurricane traders to be meteorologists and hurricane experts. But other contributions can be valuable, he said. "Animals act strangely when an earthquake is approaching. Maybe someone who watches animals," has a valuable insight. TV forecasters, atmospheric scientists at universities, and longtime residents of hurricane districts might be good traders, too, he said. The Associated Press article also appeared on the websites of the SARASOTA (Fla.) HERALD-TRIBUNE, TALLAHASSE DEMOCRAT, MIAMI HERALD, and BRADENTON HERALD in Florida, ST. PAUL PIONEER PRES and DULUTH NEWS TRIBUNE in Minnesota, NEW YORK TIMES, SEATTLE POST INTELLIGENCER, KANSAS CITY STAR, LOS ANGELES TIMES, SAN JOSE MERCURY NEWS, MSN MONEY, MSNBC, CANADIAN TV NEWS, NEW YORK NEWSDAY, FORBES, ABC NEWS, KABC-TV in California and several other media outlets.
Contact: Forrest Nelson