[ Metro | Metroactive Central | Archives]

Polis Report

Donkey Market

By Gordon Young

Who needs porkbellies when you can trade Pat Buchanan on the World Wide Web? The aptly named Iowa Political Market lets market forces sort out who is likely to be the next president of the United States. Created by the University of Iowa business school, it has easily outperformed public opinion polls in the last two elections.

Think of it as the equivalent of rotisserie baseball for political junkies. Investors are allowed to spend from $5 to $500 to trade in futures contracts representing candidates. In one market, the final value of a contract is equal to the candidate's eventual share of the vote. For example, if jug-eared megabore Ross Perot pulls down 19 percent of the vote, each one of his contracts would be worth 19 cents. If you bought 1,000 Perot contracts for a dime each, then you make $90. There's also a winner-take-all market that pays out $1 for every contract in the winning candidate. And don't forget the Republican Convention Market (pssst, Lamar Alexander is going cheap).

The value of a contract at any given time represents the market's confidence in the candidate's ability to win. At press time, it was definitely a donkey market. A contract in Bill Clinton was selling for about 47 cents, while contracts in the president's as-yet-unnamed Republican opponent were languishing at less than 42 cents.

[ Metro | Metroactive Central | Archives]