U-of-I’s political market predicts Gray’s out, Arnorld’s in

The University of Iowa’s “Electronic Market” predicts California Governor Gray Davis will be tossed out today. George Neumann, one of the professors who manages the market, says about seven thousand trades have been made as folks buy stock in the recall market. Neumann says based on those stock trades, the market indicates there’s a 90 percent probability Davis will be recalled, which Neumann says is much more confident that the polls would indicate. A separate market also predicts Arnold Schwarzenegger will win the battle to replace Davis. Neumann says the market indicates there’s an 89 percent probability Schwarzenegger will win. Neumann says the Iowa Electronic Market has proven a more accurate predictor of the outcome of elections than public opinion polls. Neumann says the market’s more accurate because people “have to put their money where their mouth is.” Tom Rietz, another University of Iowa professor who helps run the market, says there’s been a lot of “volatility” in the market over the past week. Rietz says “things seem to be bouncing around a bit, reflecting some uncertainty.” But the numbers have consistently predicted Davis will be recalled, and Schwarzenegger has the edge in the race. There are two other election-predicting markets at the University of Iowa. One lets traders bet on which candidate will win the Democratic party’s presidential nomination. The other lets traders put their money on which presidential candidate they think will win the general election.