MICHELE NORRIS, Host:

From NPR News, this is ALL THINGS CONSIDERED. I'm Michele Norris.

MELISSA BLOCK, Host:

And I'm Melissa Block. Researchers at the University of Iowa have come up with a novel way of predicting the chances of a devastating flu pandemic. The technique is borrowed from futures markets and commodities such as corn, pork bellies and orange juice. Flu experts around the world will bid on whether they think the chances of a pandemic are rising or falling. NPR's Richard Knox has the story.

RICHARD KNOX: The idea of using futures markets goes back to the 1988 presidential election. Economist Forrest Nelson and his buddies were sitting in a sports bar in Iowa City, puzzling on how the polls could have been so wrong in predicting Michael Dukakis would win the Georgia Democratic primary.

FORREST NELSON: Somebody in the group said, you know, if the markets in Chicago did as bad a job of predicting the November price of corn as these polls did in predicting the very next day's election, then those markets wouldn't exist.

KNOX: Nelson and his University of Iowa colleagues decided to set up a futures market to predict elections. They invited politician mavens to buy and sell shares in candidates as the campaigns unfolded. It worked. Nelson says they have an 18-year track record of beating opinion polls in elections all over the world.

The group has also used experts to predict when hurricanes will come ashore, which computer printers will sell and how movies will do at the box office. Three years ago, a young infectious-disease specialist persuaded the economists to try their hand at predicting annual flu in Iowa.

PHILIP POLGREEN: Most people think that the only thing predictable about flu is that you can't predict it.

KNOX: Dr. Philip Polgreen doesn't buy that. He says lots of people have bits and pieces of information that tell when regular, seasonal flu is on the march: pediatricians, nurses, pharmacists, lab technicians who test respiratory samples.

The Iowans invited these front-line observers to buy and sell shares in a flu futures market, investing in yes-or-no questions about the number of flu cases likely over the coming weeks.

POLGREEN: So it's not just one person's hunch, but you're able to mix all those together and come up with a consensus hunch of the crowd.

KNOX: The market accurately predicted when flu would sweep through Iowa, something hospital administrators really want to know in advance.

POLGREEN: Often, the peak of flu season is when the beds run out, the emergency rooms are overcrowded, there are staffing shortages. And at the same time, healthcare workers are extremely vulnerable to influenza, so they will get sick as well.

KNOX: The next logical step was whether a futures market could help predict a much bigger question: Will Asian bird flu touch off the next global flu pandemic? To set up that market, Polgreen needed access to flu experts all over the world. He turned to Dr. Larry Madoff. Madoff runs a Web-based network of infectious-disease specialists called ProMED.

LARRY MADOFF: By being participants in the ProMED system, they are very rich in information. They receive daily - many times daily - reports of outbreaks, reports of disease occurrences, reports of unusual events.

KNOX: A few years back, ProMED posted alerts on what turned out to be SARS days before the World Health Organization reported the problem. With funding from the Robert Wood Johnson Foundation, which also contributes to NPR, the pandemic futures market has been in trial runs. Next, 100 ProMED members will be given $100 each to bid with. Beta-testers have already been putting money on a series of 11 questions, such as...

MADOFF: Will a new World Health Organization confirm a human case of H5N1 in North or South America, occur between February 12th and July 1st of 2007? Yes or no? And right now, the current consensus is that it will not - by over 90 percent at this point. It will not happen.

KNOX: A yes share was running only two cents. That is, the beta-testers think there's only a 2 percent chance that a human case of bird flu will pop up in the Americas over the next four months, but like all markets, that could change in an instant. Richard Knox, NPR News.

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