1. Prediction Markets In
Health Care
George R. Neumann
Iowa Electronic health
Markets

2. Markets In Health Care
The IEhM has worked on 3 different
types of health markets
Seasonal Influenza
Avian Influenza
Syphilis
I will discuss what we have learned
from these markets

3. Markets In Health Care
Why are Prediction Markets Important
in Health Care?

4. Markets In Health Care
Why are Prediction Markets Important
in Health Care?
Cost savings with greater forecast accuracy
o
o Influenza causes:
36,000 deaths annually in the U. S.
120,000 hospital admissions
Medical treatment can be adjusted if an
outbreak of flu is anticipated
o Prophylaxis of nursing homes
o A vaccine is available as are several medications

5. Markets In Health Care
Vaccine effectiveness depends on
timing as well as predictions about
which strains to put in the vaccine. It
takes about 2 weeks for the vaccine
to become effective.
Antiviral medicines such as
Oseltamvir (Tamiflu) require 48 hour
advance treatment

6. INFLUENZA MEASURES
CDC COLOR DEFINITIONS
WIDESPREAD
REGIONAL
LOCAL
SPORADIC
NO ACTIVITY
DATA MISSING

8. Markets In Health Care
The prediction problem with influenza
IOW A 20 07-2 008 2006- 2007 2005-2006 2 004- 2005 2003- 2004 20 02-2 003 200 1-20 02 200 0-20 01 1999- 2000
WEEK CO LOR COLOR COLO R COLOR COLOR CO LOR CO LO R CO LO R COLOR
Y Y Y Y Y Y Y Y Y
40
Y Y Y Y Y Y Y Y B
41
Y G Y Y Y Y Y Y Y
42
43 Y Y Y Y Y Y Y Y Y
44 Y G Y Y Y Y Y Y G
45 Y G Y Y Y Y Y Y G
46 G G Y Y Y Y G Y B
G G Y Y G Y G Y G
47
G G Y Y B Y G G G
48
G G G G R Y Y G G
49
50 G B G G R Y G G G
51 G B G P R Y G G R
52 G B G B R Y G G R
1 P B B B R Y G G R
2 P B B B R G G B R
B R B B B G Y B R
3
B R B R B G G R R
4
5 R R B R P B B B G
6 R R B R P R B B G
7 R R B R G R G B G
8 R R R R G R B R Y
9 R R R B Y R B G Y
R B R B Y B B G Y
10
R B R P Y G G Y Y
11
12 R P B G Y G G G Y
13 R P B G Y G G Y Y
14 B G P G Y G G Y Y
15 G G G G Y Y G Y Y
16 G G G G Y G G Y Y
Y G G Y Y G G Y Y
17
Y Y Y Y Y Y G Y Y
18

9. Markets In Health Care
The epi Curve for Iowa
The Epi -C urve
6
5
4
2007__Act ual
3
7-Year His tor i cal Aver a ge
2
1
0
Fl u Week

10. Markets In Health Care
The CDC provides a state-by-state
description of influenza activity but it
is two weeks out of date before it
becomes available.

11. Markets In Health Care
We have run markets in Iowa, North
Carolina, and Nebraska
Markets by Year and State.
Year State Number of Markets
2007-2008
Iowa 31
Nebraska 31
North Carolina 31
2006-2007
Iowa 29
North Carolina 27
2005-2006
Iowa 29
2004-2005
Iowa 14
Total 192

12. Markets In Health Care
Who participates?
Trader Characteristics in Iowa-2006-2007
Occupation Freq. Percent Cumulative %.
-- 1 1.12 1.12
Administrator 3 3.37 4.49
Microbiologist 14 15.73 20.22
Nurse 15 16.85 37.08
Other 21 23.60 60.67
Pharmacist 8 8.99 69.66
Physician 20 22.47 92.13
epidemiologist 7 7.87 100.00
Total 89 100.00

13. Markets In Health Care
What did we learn?
Trader heterogeneity can be a curse
Software and training materials have to be
adapted to the knowledge and inclinations of
the audience. This is hard to do when the
audience differs in background.
It is essential to do if members have different
amounts and types of information. E.g.
microbiologists vs. school nurses.
PM’s work well, even with heterogeneous
traders

14. FORECAST ACCURACY- IOWA
2004-2008
0.75
0.70
0.65
0.60
0.55
% Ex actly Correct
IA_ MKT
0.50 IA_ HIST
IA_ MARKOV
0.45
0.40
0.35
0.30
0.25
1 2 3 4 5
WEEKS IN ADV ANCE

15. Forecast Success
% Correct
Method 5 weeks 3 weeks 1 week
Markets 59% 63% 68%
History 49% 49% 49%
Markov 30% 43% 57%

16. Forecast Success
% Δ in No. Correct
State 5 weeks 3 weeks 1 week
IA 106% 146% 136%
NC 78% 125% 150%

17. Avian Flu
We partnered with PROMED to
recruit traders from around the world.
There are about 20,000 members of the
International Society for Infectious
Disease, located in 155 countries.
Promed-mail is their major way to
communicate daily.

18. Avian Flu: Trader Locations

19. Avian Flu
Contracts typically were about how
many cases of Avian H5N1 would
occur in a specific region in a specific
time period (6 months).
Contracts were also traded on
whether there would be human to
human transmission of Avian Flu in a
specific time period.

20. Q.: Will there be human to human
transmission of H5N1 in the EU by
12/31/2008

21. Q: Will the World-wide # of deaths
from Avian Flu exceed xxx

22. Seasonal and Avian Flu
Finding the right audience for a PM
can make the job easier.
Emphasis on graphical display helps a
lot with medical types.
Future projects: Virus strain prediction,
Vaccine Effectiveness
Animal infections

23. Syphilis Markets
There are two significant features of
syphilis: quantity of cases and gender
mix

24. Total New Syphilis Cases-Nationwide
1984-2006
60000
50000
40000
30000
20000
10000
0
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

25. Syphilis — Reported cases : United
States, 1941–2007
Cases (in thousands)
600
P&S
Early Latent
Total Syphilis
480
360
240
120
0
1941 46 51 56 61 66 71 76 81 86 91 96 2001 06

26. %
0%
10%
20%
30%
40%
50%
60%
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
Year
96
1984-2006
19
97
19
98
19
99
20
00
20
01
20
02
20
Fraction of New Syphilis Cases That Are Female
03
20
04
20
05
20
06

28. Syphilis Markets
No results so far –markets go
operational in May. But lots of
enthusiasm at the CDC.
Check it out at
http://iehm.uiowa.edu/iehm/index.html