Think bird flu will become a worldwide threat this summer? Wanna put some money on that?
In an unusual effort to better predict the advance of a potential flu pandemic, public health experts will be staked about $100 apiece to bet on the spread of bird flu. This type of grim futures market has also been created to predict hurricanes and temporarily, a few years ago, terrorist attacks.
In this case, the goal is to develop a faster way to collect expert opinion about the potential spread of a deadly disease outbreak.
“Farmers have used futures markets for decades to make decisions about what crops to plant. We’re just borrowing that concept to help people in public health and health care make decisions about the future,” said Dr. Phil Polgreen, a University of Iowa assistant professor of medicine who helped create the project.
It’s being funded by the Robert Wood Johnson Foundation, which is donating nearly $250,000 to the effort. The University of Iowa, which set up futures exercises for hurricane predictions, box office receipts and presidential elections, will operate the bird flu enterprise.
Organizers hope to recruit at least 100 epidemiologists, veterinarians and other medical experts from around the world for the two-year project. They will be asked to join an online trading system akin to agricultural futures markets, in which investor buys contracts that businesses will be able to deliver certain volumes of, say, corn or pork bellies.
But in this project, the contracts represent not the likelihood of a good corn harvest but the odds that deadly bird flu will infect a human in Hong Kong by July 1.
“Yes” contracts on that prediction are currently trading at 43 cents. That means the experts think there’s a 43 percent chance of that occurring.
At issue is the deadly H5N1 strain of bird flu, which has killed 167 people in 10 countries since 2003, but so far hasn’t been easily spread from person to person. Health officials fear it will mutate into a highly contagious form that could kill millions worldwide.
Health officials have been closely monitoring reports of human and animal infections, but what will happen next is a matter of assorted speculations.
Forecasting future events
Since 1988 the University of Iowa has operated a project called the Iowa Electronic Markets (IEM), which aggregates predictions to forecast major events. Much of the focus has been elections, and the Iowa markets have generally outperformed political polls.
A predictive market for seasonal flu, operated in Iowa and North Carolina, correctly predicted the current level of flu activity in an area 71 percent of the time, even though the predictions were made before any solid surveillance reports. The market had a 50 percent success rate at predicting flu activity a week in advance, according to a recent report in the journal Clinical Infectious Diseases.
Such markets have sometimes proved controversial. In 2003, the Pentagon dropped plans for a futures market that would have allowed traders to profit from accurate predictions on terrorism, assassinations and other events in the Middle East. Some lawmakers attacked the idea as immoral; U.S. Sen. Tom Daschle of South Dakota described it as a “plan to trade in death.”
Organizers predicted the bird flu market should prove less controversial, and the New Jersey-based Robert Wood Johnson Foundation cautiously agreed.
“It might be considered controversial if it’s not well understood,” said the philanthropy’s Robert Hughes.
He noted that public health experts won’t be gambling their own money, so opportunities for financial gain are extremely limited.
No Joe Blows allowed
Also worth noting is the buy-in of ProMed, a respected disease-monitoring program of the International Society for Infectious Diseases. ProMed, with a staff of 30, collects disease updates and e-mails them to 40,000 international members, making it the largest such service in the world.
Betting participants must be ProMed members. “We’re not just letting in Joe Blow off the street. These are experts,” said Forrest Nelson, a University of Iowa economist who co-founded the IEM.
Dr. Larry Madoff, ProMed’s editor, said the bird flu market should be complementary to the disease surveillance systems traditionally used.
“This is an experiment,” Madoff said. “The hypothesis is we’ll be able to harness lots of people with different viewpoints and information, and we know sooner when something is going to happen than if we wait for a report.”
U.S. Centers for Disease Control and Prevention officials were briefed on the project, but spokesman Glen Nowak said it was too early “to be able to judge the value.”
A preliminary version of the market started two weeks ago, with about a dozen medical professionals from the seasonal flu market participating and setting the price. Organizers have put together an initial list of 11 yes/no questions, and each of those is a separate market.
One example: Will a human case of H5N1 occur in North or South America by July 1? Yes contracts are selling at only 5 cents, meaning the participants think there’s only a 5 percent likelihood of that.
Each initial bet is $2.50, and over the course of a year, the average trader is expected to make about $100, depending on accuracy.