Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.

 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate


On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.


RSS 2.0

Iraq: Futures an accurate predictor of the election

By Justin Wolfers - posted Tuesday, 8 March 2005

A lot has hinged on the success of the Iraqi election, both in Iraq and among coalition governments. But was the election a success? Judging by the tone of the news reports over the past few weeks, turnout vastly exceeded expectations. But what do we know about the election today that we didn't know four weeks ago?

Firm numbers about turnout were absent from nearly all of the celebratory reports, and indeed turnout numbers were only released subsequent to most news analysis.

Looking for at least one objective measure, I turned to an unusual source, an Irish website, which established a futures market focusing on “turnout in the Iraqi election”. The structure was simple: you could buy or sell a future that would pay US$100 if total turnout exceeded 8 million votes.


Before the election, this future was selling for about US$65. Following very early reports that turnout had hit 72 per cent, the price of the security rose as high as US$95. The price fell sharply as the poor quality of the early information became apparent. It hovered at about US$50 while the count proceeded.

What does this tell us?

First, there were no surprises in Iraq, positive or negative. Before the election, markets perceived it more likely than not that turnout would exceed 8 million. And, indeed, when the official count was released recently, turnout was 58 per cent, or 8.56 million people.

Second, most reporting on the "success" of the poll occurred not only before official figures were released, but also during a period in which this market suggested commentators actually had little serious indication as to whether or not turnout would exceed expectations. In the end, turnout exceeded 8 million, but given pre-election trading, the markets suggested this was the sort of success they had expected.

As those who followed the betting markets during the Australian Federal election can attest, election futures can be extremely accurate, aggregating news from multiple formal and informal sources. Moreover, for the interested citizen, these markets provide a way to cut through the rhetoric and figure out precisely what is known and what is speculation.
Politics has become so much about managing and then beating expectations that it can be hard to tell what is good news and what simply appears to be good news relative to a successful campaign to dampen expectations. These markets provide some insights.
Today's optimistic news headlines on Iraq appear to reflect unrealistically dampened expectations of low voter turnout. So far, it seems that the election went about as well as expected, and much of our optimism simply reflected uninformed speculation.

  1. Pages:
  2. Page 1
  3. All

Article edited by Maggie Dunphy.
If you'd like to be a volunteer editor too, click here.

Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

Share this:
reddit this reddit thisbookmark with Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Dr Justin Wolfers is an Assistant Professor of Economics at Business and Public Policy Department of the Wharton School, University of Pennsylvania.

Other articles by this Author

All articles by Justin Wolfers

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Photo of Justin Wolfers
Article Tools
Comment Comments
Print Printable version
Subscribe Subscribe
Email Email a friend

About Us Search Discuss Feedback Legals Privacy