IEM's Success Noted

A story about prediction markets notes the IOWA ELECTRONIC MARKETS, run by professors at the UNIVERSITY OF IOWA. It was set up, initially, to predict two-party presidential elections in the U.S. Today, it makes forecasts of other social and economic events. In the 1988, 1992, 1996 and 2000 presidential elections, the IEM's error between its forecast of share of votes and the actual votes received by either party was 1.5 percentage points. By contrast, the error of the final Gallup poll was 2.1 percentage points. The IEM's longer-run forecasts were "impressive." Its average error was only 5 percentage points 150 days before the elections. Other polls like Gallup had much larger errors in their predictions. The Manila Times is published in The Philippines.