[Paleopsych] IDSA: Wall Street Methods Used to Predict Flu Outbreaks
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Wed Oct 19 01:50:42 UTC 2005
IDSA: Wall Street Methods Used to Predict Flu Outbreaks
By Rabiya Tuma, Ph.D. , MedPage Today Staff Writer
SAN FRANCISCO, Oct. 7 - Using Wall Street traders' techniques, healthcare
workers predicted flu outbreaks two weeks before the actual events, according
to a pilot study.
The CDC tracks influenza data but lacks a method of predicting future trends,
the researchers reported here. In the business world, so-called "prediction
markets" have been used to accurately forecast the outcome of a variety of
chance events, including political elections, the number of tickets sold on the
day a movie opens, and equipment sales.
To test whether such market methods would be useful for prediction of
infectious diseases, researchers at the University of Iowa recruited 60
healthcare workers from their state and organized a stock-market scenario. They
described their methods and results at a meeting here of the Infectious Disease
Society of America.
All the "traders" were given 100 flu dollars at the start and were asked to buy
and sell "stock" according to how much influenza activity they thought would
occur in a given future week. The goal was to try to predict the level of an
outbreak ultimately recorded by the CDC, which is reported by a five-stage
If they saw hints of flu in their patients, for example, they might want to
sell any shares they owned that predicted a low-level week in the near future
and buy stocks that predicted many cases.
With 52 traders actively participating on the website, market predictions were
able to hit the right color for the state of Iowa 80% of the time, two to three
weeks ahead of the actual cases. That means they were three to four weeks ahead
of the CDC's announcement of the actual data, which comes out the week
following the outbreak week in question.
"Ninety-percent of the time, the market was able to get within one color four
weeks ahead of the event," said Forrest D. Nelson, Ph.D., an economist at the
university who has developed prediction markets and is a member of the research
At the end of the study, the flu dollars were converted into U.S. dollars, and
each participant won a grant of that amount. The most successful trader's grant
was worth $213.
"There is currently no method for forecasting influenza activity, but the
information needed is out there," said Philip M. Polgreen, M.D., the infectious
disease specialist who led the study. "But it's spread out." The prediction
market aggregates individual experiences into collectively useful data, he
Two weeks of advance warning about an influenza outbreak would permit
significant preparation, including immunization of the most vulnerable
population, making sure pharmacies have adequate antivirals in stock, and
increasing staffing at hospitals.
The team plans to expand the "market" to include 100 traders in Iowa this year,
and then to cover the U.S. within a year after that. It is not yet clear how
many traders will be needed to cover the whole country. "We hope to be posting
prediction data next year," Dr. Polgreen said.
The researchers also plan to open a "strain market" to predict the prevalence
of individual flu strains.
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