The Modern Journalist

Predictive Markets: An Argument

I received an email this weekend from an organization that built a news prediction site, something I’ve been discussing in the Newspaper 2.0 section and over at the NING social networking site.

The site is Hubdub and the developers have also put together software widgets that allow you to track results on your individual website (something that Jeff Jarvis at Buzz Machine has implored news organizations to start doing — syndicating outside the banner ad model).

One of the cooler aspects is that anyone can start a category and pose a question. This is an except from the email sent to me by Nigel, the chief news junkie at Hubdub (ah, the days of weirdly ambiguous tech titles:

Hubdub is a prediction market around news stories. Anyone can create a market on any topical questions and then the other users trade the outcome. We are very strong on politics, entertainment and technology (which is my category, I am a huge Wired fan).

I’ve mentioned my love of predictive markets. One of the most painful things I did at Technology Review was shut down our market, which was written about in Wisdom of Crowds, because we didn’t have the manpower at the time to build the service out.

There are, of course, a variety of ways to approach the predictive market.

Jason, my editor, wanted us to incorporate Steward Brand’s Long Bets into the Technology Review site, which I botched because we had neither money nor resources to make it work.

Unlike predictive markets, Long Bets allow people to place bets against individuals to see who is correct on a particular topic or posit predictions (which people can challenge — and turn into a bet) on a specific topic.

For instance, Martin Tobias posted this prediction:

In 2010 more diesel passenger vehicles will be sold in the US than hybrids.

You can click on the link and see Tobias’ argument along with who has challenged him (nobody at this point); however, if you disagree, you can place a bet against Tobias. When the time frame elapses, one of the two of you will win the bet.

This type of “vanity” predictive market, though, is more about enticing a conversation about a subject than aggregating the masses, which is what news organizations would want to do (although frankly I wouldn’t view this as an either/or; this is a both/and). Either way, reporters could cull stories from the citizen engagement that comes from such involvement.

Editors, I’m guessing, would be loathe to include such “unscientific” thinking in their news judgment; however, predictive markets used correctly could actually increase the accuracy and engagement of readers.

The most famous of these markets, the Iowa Electronic Market, is run by the University of Iowa’s College of Business and has more accurately predicted the past several presidential elections than any other polling agency. The project is both a research and a teaching tool.