Nelson Recounts Start Of IEM

A story about the Electronic Stock Market at the University of British Columbia says it was derived from the creation of the Iowa Electronics Market. The idea of an election stock market got its start in Iowa in 1988. It was conceived at lunch one day after the Michigan primary that year by three economics professors from the University of Iowa. "Jesse Jackson won that primary and it was a huge surprise," says FORREST NELSON, professor of Economics at the University of Iowa and one of the originators of the idea of election stock markets. "All the polls were predicting Dukakis would win and that Jackson wouldn't even make a decent showing," he says. At the time, Nelson and his colleagues joked that if the financial markets in Chicago did a similar job in predicting the November price of corn they would be out of business. But, in this joke was a fruitful idea, recalls Nelson, and soon they were running the Iowa Electronic Markets in a bid to try to predict political outcomes. In 17 years, the IEM has run 49 markets dealing with 41 elections in 13 countries. "Our latest market, dealing with the last U.S. Presidential election, had around 2,500 traders with a total investment around of $200,000 (U.S.)," says Nelson. The Tyee is based in Vancouver, B.C.