17 Jan 2012

Online prediction service seen as more accurate than polls

11:06 am on 17 January 2012

The election result for National and Labour was most accurately forecast by an online prediction stockmarket, iPredict, and not by traditional pollsters.

The futures trader is known mainly in the political and economic sectors and has stocks on everything from the domestic and international political scene to what the price of petrol will be.

Set up before the 2008 election by the commercial arm of Victoria University, iPredict is an authorised futures dealer with over 6000 traders.

If you want to buy stocks on whether North Korea will drop a nuclear weapon in 2012 or who is going to be the chair of Parliament's Education and Science Select Committee, you can do it on iPredict.

iPredict's marketing is done by a company called Exceltium, in exchange for revenue from it. Exceltium is run by political commentator and former National Party staffer, Matthew Hooton.

He says iPredict aggregates information from various sources, public opinion and those investing in stocks to come up with its assessment of the likelihood of particular events happening.

With Mr Hooton having close associations to the National Party, a Radio New Zealand political reporter says there have been accusations that stocks can be skewed - either by the stocks that are put up, or investment in them.

But Mr Hooton denies this, saying stocks are chosen according to the political and economic environment, the topics of the day, what's suggested in iPredict's forum and paid stocks from those wanting to use it for research.

And he says it's very difficult to skew stocks.

University of Michigan political studies Professor Rob Salmond of New Zealand, who has a particular interest in polls and prediction markets, says, internationally, prediction markets are becoming quite influential because they can predict events that are very fluid and are often accurate.

One politician who follows iPredict is Labour's Trevor Mallard, who says it's particularly useful for seeing information that has been leaked.

Mr Hooton says it's unlikely that mainstream media will regularly use iPpredict predictions. He says media organisations pay for their polls and will want to hang on to them to use exclusively.

Professor Salmond says iPredict will grow and strengthen - but won't replace opinion polls.

Mr Mallard agrees, saying iPredict will remain a useful tool for people wanting to get more information about what's going on, but essentially it is an interesting diversion for those interested in politics.