October 22, 2004 | MSNBC.comThe notion that an open market can accurately predict the outcome of an election was pioneered by academics at the University of Iowa where the now oft-quoted Iowa Electronic Futures Market, a real-money market that allows punters to buy futures contracts based on the outcome of economic and political events, was established in 1988. Run by the university's business school and regulated by the Commodity Futures Trading Commission, the Iowa market has spawned similar futures markets at Intrade.com and Tradesports.com, and they have been remarkably prophetic. Compared with 596 national polls in four presidential election cycles between 1988 and 2000, the Iowa market was closest to the actual election result 76 percent of the time, notes THOMAS RIETZ, a finance professor at the University of Iowa and director of the Iowa futures market. Indeed, early on in the 2000 White House race, the polls put George W. Bush as the clear winner, but the Iowa futures market predicted a dead heat as early as May that year, Rietz said.
Contact: Thomas Rietz