Nelson Comments on IEM

People who criticize politicians for paying too much attention to the polls may have a point. According to online wagering sites, would-be public servants could've predicted election outcomes a lot better by looking at the betting odds. With the 2002 congressional election mere weeks away, campaign managers may heed that advice by perusing the IOWA ELECTRONIC MARKETS, one of the operations with the most experience processing wagers on U.S. voting results. The site -- a nonprofit endeavor run by the University of Iowa's Tippie School of Business -- has provided a market since 1988 for traders to buy and sell contracts predicting U.S. election results. Currently about 17,000 people are placing trades for the November election. "The central premise is that markets can reveal information about future events," said FORREST NELSON, an economics professor at the university and board member of the Iowa Electronic Markets. So far, Nelson says the market has proven fairly accurate in predicting presidential elections. In the last four presidential contests, traders' predictions for candidate vote totals have come within 1.5 percent, on average, of the actual results.

Read the article