This week's alarms over swine flu may have come as a shock to most people, but not to experts in threat prediction: One company said it began warning public-health agencies about the potential for a pandemic weeks ago. Prediction experts have set up a market to forecast the flu outbreak's future.
Unpredictable? Just try telling that to Forrest Nelson, an economics professor at the University of Iowa and one of the principal investigators for the Iowa Electronic Health Markets. The IEHM, which was spun off from the successful political prediction markets operated by the University of Iowa, started up a swine-flu prediction market just today.
"There's so much uncertainty and confusion out there, we decided if we could contribute something, this is the time to do it," Nelson said. The IEHM has been experimenting with flu prediction markets for five years: Public-health officials, hospital workers and others in the health-care profession can become "traders" in a market aimed at rewarding those who accurately forecast how flu outbreaks spread.
Nelson said the markets have been "pretty good at predicting flu activity about three or four weeks out." To be more precise, the consensus four-week prediction matched the actual activity level (measured on a five-level scale) 80 percent of the time, he said. Unlike the IEM's political markets, the IEHM's swine-flu market will not be open to the general public (although we can watch), and it won't use real money.