November 20, 2003 | Campaigns and Elections, October/November 2003When a Pentagon agency proposed a futures market to help forecast political events in the Middle East, it quickly died amid criticism that the program would allow bettors to capitalize from predicted terrorist attacks. Largely lost amid the criticism of the Defense Advanced Research Projects Agency (DARPA) were dispassionate voices of economists, statisticians and others who contend that free markets are actually pretty good predictors of future events. That theory has long been applied to politics at the University of Iowa's Tippie College of Business. Its Iowa Electronics Market (IEM) allows students and others to place bets on upcoming elections. The market-based program's creators say it is a better predictor of voter behavior than conventional polling techniques. Polls are only snapshots of public opinion during a static period of time, said THOMAS RIETZ, a University of Iowa finance professor and a director of the IEM. "They don't take into account the fact that people may change their mind," he said.
Contact: Thomas Rietz