June 13, 2004 | Sunday Times of LondonThe search for a different form of political forecasting -- one that ignores day-to-day swings in voter opinion and focuses on the likely result -- has led to the creation of the new futures market. On the IOWA ELECTRONIC MARKETS (IEM) and several similar exchanges the "commodities" are politicians and investors bet on their prospects. Investors can choose either Bush or Kerry. Each candidate has a "price" that moves up and down according to investor interest, like a company share. On the IEM, investors in the winning candidate will be paid $1 a share. Investors were yesterday paying 51 cents for a share in Bush and 47 cents for Kerry; an effective judgment by market forces that Bush is likely to win by 51-47 percent. A recent University of Iowa study of the IEM's performance in 49 domestic and foreign elections found that the market had an average margin of error of only 1.3 percent -- well below opinion poll margins.
Contact: Forrest Nelson