February 6, 2004 | Cedar Rapids GazetteUniversity of Iowa economists who helped pioneer futures trading to predict presidential election outcomes have created a futures market that could help health professionals track future flu outbreaks. The Iowa Electronic Markets launched its first influenza futures market Jan. 16, encouraging invited nurses, doctors and health professionals to buy and sell contracts based on the influenza activity levels tracked by the Centers for Disease Control and Prevention. Each of the invited traders was supplied with $100 in "flu dollars," essentially play money. They could sell or buy influenza futures contracts for the week from Jan. 18 to Jan. 24 depending on what they thought the CDC-reported influenza activity level in Iowa would be. Contracts were offered in white/yellow (no activity reported), green (sporadic activity), purple (local activity), blue (regional activity) or red (widespread activity). In the market's first one-week trial, over 100 contracts were traded by about a dozen traders. The highest-traded contract was blue (regional influenza activity) at 95 cents per contract. The CDC's reported activity for that week in Iowa was blue, suggesting the market had useful predictive value. "As far as I know, this is the first effort at using markets to predict disease," said UI economics professor FORREST NELSON.
Contact: George McCrory