Predictive Markets

Instapundit linked to this post, which points out how the polls in 2002 seemed to favor gains by the Democrats.

This wasn't so interesting to me, as I care little for polls but instead follow predictive markets. So I decided to look at what the predictive markets were saying in 2002.

Now, I generally watch Tradesports, but the Iowa Electronic Markets are older and have its closed markets archived for public viewing.

Currently, as with tradesports, IEM is calling a 2006 election that ends with a Republican Senate but not a Republican House (NH_RS=Not Republican House, Republican Senate).

Yet it turns out that in 2002, IEM markets indicated that Republicans would lose the house. Which we now know is wrong.

They were pretty consistent in their 2004 presidential prediction, however.

I recall that Surowiecki discussed the fact that the predictive markets for congressional elections tended to be less accurate than the presidential ones--because fewer people got involved in the betting.

In any case, I'll still be following the markets to see how they line up with the upcoming elections. There seems to be a lot of participation this time, so we'll just see.