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Flu forecasts come true

KING-TV
Click for video: A global map at Veratect's headquarters highlights infectious-
disease events. Click on the image to watch a video report from Seattle's KING-TV.

This week's alarms over swine flu may have come as a shock to most people, but not to experts in threat prediction: One company said it began warning public-health agencies about the potential for a pandemic weeks ago. Today, the spread of swine flu is being tracked in real time on interactive maps - and prediction experts have set up a market to forecast the flu outbreak's future.

Keeping track of the outbreak is all in a day's work for Veratect, a company based in Kirkland, Wash., that monitors health threats as well as terrorist attacks and natural disasters. "Unfortunately for all of us, there's a lot of that going on every day," Bob Hart, the company's president and chief executive officer, told me today.

"The world map is completely swamped with yellow and red alerts," he said.

Veratect started watching the reports from Mexico on March 30, and by mid-April the upswing in flu cases was serious enough to trigger two waves of e-mail alerts, sent out from Veratect to the federal Centers for Disease Control and Prevention and other public-health agencies. Nevada's state epidemiologist, Ihsan Azzam, said in a Veratect statement that those were "the very first alerts I received regarding this swine-flu epidemic."

On April 20, Veratect took the extra step of calling up the CDC's Emergency Operations Center, Hart said. By that time, CDC officials had picked up on reports of unusual swine-flu cases in California and Texas, but Veratect's data pinpointed Mexico as the emerging epidemic's epicenter. (This Veratect timeline from the Biosurveillance blog provides a blow-by-blow account.)

"We're sort of like that fire watchtower," Hart explained in an interview with Seattle's KING-TV. "You're looking for a few wisps of smoke so you can send people in when it's just a smoldering fire as opposed to waiting until it's got half the Cascades."

Now the swine-flu outbreak ranks as one of the biggest flare-ups of infectious disease in recent years, and it's being tracked using Google Maps and Twitter. Meanwhile, Veratect is continuing to monitor the yellow and red dots on its computerized world map. "This is like a weather system for infectious-disease events throughout the world," the company's chief technical officer, James Wilson, told KING-TV.

Wilson said the swine-flu virus' rapid spread shows that "we need a global early-warning system - this could be unpredictable in its effects."

Unpredictable? Just try telling that to Forrest Nelson, an economics professor at the University of Iowa and one of the principal investigators for the Iowa Electronic Health Markets. The IEHM, which was spun off from the successful political prediction markets operated by the University of Iowa, started up a swine-flu prediction market just today.

"There's so much uncertainty and confusion out there, we decided if we could contribute something, this is the time to do it," Nelson told me.

The IEHM has been experimenting with flu prediction markets for five years: Public-health officials, hospital workers and others in the health-care profession can become "traders" in a market aimed at rewarding those who accurately forecast how flu outbreaks spread.

Nelson said the markets have been "pretty good at predicting flu activity about three or four weeks out." To be more precise, the consensus four-week prediction matched the actual activity level (measured on a five-level scale) 80 percent of the time, he said.

Unlike the IEM's political markets, the IEHM's swine-flu market will not be open to the general public (although we can watch), and it won't use real money.

Here's how the system works: Health-care experts are given 100 "swine dollars" to invest on a series of propositions. If they correctly predict the outcome, they win $1 per share. If they're wrong, they lose their investment. Shares can be traded at different prices as the market rolls along, until the trading deadline comes due and the accounts are settled. The price of the day should reflect the perceived probability for the investment outcome.

Five propositions are currently listed on the swine-flu stock exchange:

  • How long will the flu outbreak last in the U.S.? As of 9 p.m. ET today, the priciest investment (and hence the highest probability) is that it will last beyond July 31 (73 cents, or 73 percent).
  • How many U.S. states will have at least one confirmed swine-flu case by May 31? The favored choice, at 39 cents a share, is 31 to 40 states.
  • What will be the level of the swine-flu mortality rate in the U.S. by July 31? The favored choice, at 48 cents a share, is 1 to 2.5 percent.
  • How many countries will have swine-flu cases by July 31, as confirmed by the World Health Organization? The favored choice, at 68 cents a share, is 26 to 50 countries.
  • How many U.S. swine-flu cases will be confirmed by the end of May 31? The favored choice, at 53 cents a share, is more than 1,100 cases.

That all sounds pretty serious, but the important thing is what happens during the weeks of trading ahead.

Because the market just opened today, trading has been rather sparse so far. Nelson expects the activity will heat up as more health-care professionals join in. Earlier experiments with flu prediction markets have attracted a peak of 200 traders, with about 60 of those currently active, Nelson said. That may not sound like a lot, but even a handful of traders can produce a good prediction if they are "strategically located" in the health-care hierarchy, he said.

"With the swine-flu markets, so much more is uncertain, so we expect it's going to take more traders to come up with reasonable and reliable predictions," Nelson said.

When the contracts expire, the payoff will come only in the form of funny money - and perhaps professional pride as well. Nelson said a "leaderboard" will show the nicknames of the traders. It may well turn out that someone nicknamed "Hawkeye," for instance, will want to show that Iowans know their stuff when it comes to infectious-disease dynamics.

"We hope that people will do it just for the greater social good ... [but] we think that there may be a little spirit of competition in addition to the greater good," Nelson said.

The swine-flu market should run at least through the summer - and perhaps even longer.

"We fully expect to do something about swine flu in the fall," Nelson said, "because we fully expect that it will come back."

Update for 9:15 p.m. ET: Hubdub.com is also offering swine-flu prediction market propositions for play-money investments (link via MidasOracle.org). And speaking of predictions, check out this LiveScience story about the year-old scientific study that said someplace like Mexico could be the site of a disease outbreak. To get a sense of the current state of flu activity, you might want to take a look at Google Flu Trends.