Subject Closed – For Now
At least someone in Washington agrees with my assessment of the potential of the so-called “terror futures market.” Here are Justin Wolfers and Eric Zitzewitz from today’s Washington Post:
Betting on human lives seems ethically questionable. Yet if it helps save lives, surely the moral questions are mitigated. Not so, according to those in Congress (and elsewhere) who created such a furor this week over a planned Pentagon program to project geopolitical risks that the program was quickly shut down. The plan was to use markets to “price” such risks, and it was quickly dubbed a “terrorism futures market.” Unfortunately, in hastily ending this program, the government may be closing the door on an important source of information and a promising avenue for research.
The authors are “assistant professors of economics at Stanford Graduate School of Business. They are co-authors (with Andrew Leigh of Harvard) of a study titled ‘What Do Financial Markets Think of War in Iraq’,” so they ought to know what they’re talking about.
But don’t take my word for it — read the whole thing.
Having been a participant in the Iowa Electronic Markets, I was really disappointed at the negative response to this idea. The link above gives lots of information on how these markets work.
I think that DARPA (which thought of this idea, as part of the much maligned TIA), has a bunch of very smart people in it.
But, the need to guard their geeks better.
This is a tragedy. The US Intelligence community is sorely in need of creativity and innovation (particularly in the world of analysis), and this had the potential to be a watershed for both. To bad the Pentagon wussed out…
Poindexter Will Be Quitting Over Terrorism Betting Plan
By ERIC SCHMITT
John M. Poindexter, the official who oversaw a plan for the
Pentagon to run a terrorist futures-trading market, is
resigning under pressure.
http://www.nytimes.com/2003/08/01/politics/01POIN.html?th
Poindexter should resign, he’s been way too ham-handed since the Reagan Administration. Besides, couldn’t this have been presented as a modification of the Delphi prediction method?