OT - Betting on Terror Attacks

[NoMyths]

This is unbelievable. If it wasn't the Associated Press I'd think it was a joke...as is it continues to underline the stupidity and complete disregard for human life and suffering by too many of our 'leaders'. Then again, I guess that posting this will mostly just result in more personal insults being tossed my way.

People, demand more from your political representatives. Especially if the ones that represent your political views are/were supporting this historically terrible plan.

Betting on Terror Attacks?
by Ken Guggenheim, The Associated Press

Update (AP): The Pentagon's plan to establish a futures market to predict terrorist acts will be abandoned, Senate Armed Services Committee chairman said. Sen. John Warner, R-Va., said he spoke by phone with the program's director, ''and we mutually agreed that this thing should be stopped.'' -- Details to Come
WASHINGTON (July 29) - The Pentagon views it as a potentially innovative way to get clues about terrorists' plans: a public, stock market-style exchange where traders can profit by correctly predicting terror attacks or assassinations in the Middle East.

Two Democratic senators say the program is useless, offensive and immoral. They are demanding that the program be stopped before investors start signing up Friday.

``The idea of a federal betting parlor on atrocities and terrorism is ridiculous and it's grotesque,'' Sen. Ron Wyden, D-Ore., said Monday.

The program is called the Policy Analysis Market. The Pentagon office overseeing it, the Defense Advanced Research Projects Agency, or DARPA, said it was part of a research effort ``to investigate the broadest possible set of new ways to prevent terrorist attacks.''

Traders would buy and sell futures contracts - just like energy traders do now in betting on the future price of oil. But the contracts in this case would be based on what might happen in the Middle East in terms of economics, civil and military affairs or specific events, such as terrorist attacks.

Holders of a futures contract that came true would collect the proceeds of traders who put money into the market but predicted wrong.

A graphic on the market's Web page Monday showed hypothetical futures contracts in which investors could trade on the likelihood that Palestinian leader Yasser Arafat would be assassinated or Jordanian King Abdullah II would be overthrown. Although the Web site described the Policy Analysis Market as Middle East market, the graphic also included the possibility of a North Korea missile attack.

That graphic apparently was removed from the Web site hours after the news conference in which Wyden and fellow Democratic Sen. Byron Dorgan of North Dakota criticized the market.

Dorgan described the market as ``unbelievably stupid.''

``Can you imagine if another country set up a betting parlor so that people could go in ... and bet on the assassination of an American political figure or the overthrow of this institution or that institution?'' he said.

But in its statement Monday, DARPA said markets could reveal ``dispersed and even hidden information. Futures markets have proven themselves to be good at predicting such things as elections results; they are often better than expert opinions.''

According to its Web site, the Policy Analysis Market would be a joint program of DARPA and two private companies, Net Exchange, a market technologies company, and the Economist Intelligence Unit, the business information arm of the publisher of The Economist magazine.

DARPA has been criticized by Congress for its Terrorism Information Awareness program, a computerized surveillance program that has raised privacy concerns. Wyden said the Policy Analysis Market is under the supervision of retired Adm. John Poindexter, the head of the Terrorism Information Awareness program and, in the 1980s, national security adviser to President Reagan.

The Web site does not address how much money investors would be likely to put into the market but says analysts would be motivated by the ``prospect of profit and at pain of loss'' to make accurate predictions.

Trading is to begin Oct. 1. The market would initially be limited to 1,000 traders, increasing to at least 10,000 by Jan. 1.

The Web site says government agencies will not be allowed to participate and will not have access to the identities or funds of traders.

The market is a project of a DARPA division called FutureMAP, or ``Futures Markets Applied to Prediction.''

``The rapid reaction of markets to knowledge held by only a few participants may provide an early warning system to avoid surprise,'' the FutureMap Web site said.

Dorgan and Wyden released a letter to Poindexter calling for an end to the program. They noted a May 20 report to lawmakers that cited the possibility of using market forces to predict whether Israel will be attacked with biological weapons.

``Surely such a threat should be met with intelligence gathering of the highest quality - not by putting the question to individuals betting on an Internet Web site,'' they said.

Wyden said $600,000 has been spent on the program so far and the Pentagon plans to spend an additional $149,000 this year. The Pentagon has requested $3 million for the program for next year and $5 million for the following year.

Wyden said the Senate version of next year's defense spending bill would cut off money for the program, but the House version would fund it. The two versions will have to be reconciled.

07/29/03 02:02 EDT

Copyright 2003 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. All active hyperlinks have been inserted by AOL.

[Fritz]

I am all for innovative approaches, but this one is morbid.

[thealmighty]

"Unbelievable" may not be a strong enough word, I think.

[Ksyrup]

This is just like the human clone issue. Yes, there are some potential benefits, but we don't allow it because the ethical and moral issues overwhelmingly obviate any good that can be gotten from it.

Can you imagine the possible disasters that could be set up just to ensure that certain people made money by betting correctly? Am I wrong, or wouldn't this potentially encourage terrorist attacks that otherwise might not have occurred?

[John Galt]

I think the idea is horrible, but it is inevitable that something similar to it exists in the insurance and reinsurance market. It isn't as public, but it is a certainty as long as companies provide insurance against terrorism.

[clintl]

I saw this on the NBC News last night. What an idiotic proposal. Aside from the ethical issues, I think it would have the real potential to increase terrorism. I'm glad to see that apparently a stop is being put to this.

[panerd]

And these same idiots (both Republicans and Democrats alike) will come around in a few more months and try to explain to me why sports gambling in the United States should be illegal. I wonder where Missouri's "esteemed" Jim Talent stood on the death gambling idea, as he has been so concerned about the poor families losing all of their money at the St. Louis area casinos. He probably wouldn't mind me throwing a few thousand down on the over of a nuke killing 10,000 people in Syria.

[heybrad]

Keep things like this idiotic program in mind next time you hear that we have no money for education or healthcare.

[QuikSand]

I'm a pretty big fan of both futures markets (and their predictve value) and wagering in general... but I have to side with the obvious majority here. Too morbid, I agree.

[rexallllsc]

What a bunch of dipshits (in charge).

[Easy Mac]

Here's a line for them:

Whats the odds on Capitol Hill getting hit with a nuke in the next week. Lets put it at 50-1

If I was a terrorist, I'd buy a nuke, lay down a million, and let fire. Would the government still pay me?

This was all in jest.

[JeeberD]

Originally posted by Easy Mac
Here's a line for them:

Whats the odds on Capitol Hill getting hit with a nuke in the next week. Lets put it at 50-1

If I was a terrorist, I'd buy a nuke, lay down a million, and let fire. Would the government still pay me?

This was all in jest.

*knock knock knock*

EM: Who is it?

HS: It's Homeland Security. Open up.

EM: Mommy, protect me....

[Easy Mac]

I don't think $375 can fund a terrorist attack, well at least my scenario.

[JPhillips]

Most of know that I am very suspect of this admin, but I'm actually not entirely opposed to this. Futures markets do have a scientifically proven predictive value. The market at University of Iowa has had a surprising record of accuracy. This will cost very little and may help stop terrorist attacks. I applaud the DOD and CIA guys for thinking outside the box.

That being said, I think there are two major problems with this scheme. First, I wish we wouldn't have announced it as a government program. I don't think some of our allies in the Middle East are going to be happy about seeing their name in this market. The example of King Abdullah being overthrown can't make him very happy. A front company or university would have been better.

Secondly, I'm afraid that it won't work as well as other futures markets. They mostly focus on collective activity and can't be easily manipulated. For example a futures market on an election would be hard o manipulate when in the end everyone only has one vote. Here it would be easy to see what's at the bottom of the list and conduct an attack there. If the Brooklyn Bridge is at the top and the Cowboy's stadium is at the bottom it seems obvious that Cowboy stadium will be less protected.

I just read that the Pentagon has scrapped this. Maybe that's for the best. I still give these guys credit for trying to find a novel method to prevent terrorism.

[Dutch]

1. This was my friends in the Pentagon that dreamt this one up, not the Bush Administration.

2. The idea was pretty outlandish with way to many flaws and what if's, but the idea was when spikes were seen for instance on a nuke hitting the White House, that would be a sign that a nuke was hitting the White House. Instead of reading about it in Hawaii the next day and saying, "Sucks to be them!", there may be some pro-active actions to take. And the original intent of the plan was not to "bet on death" but to add another measure to help prevent death. But there are two sides to every coin, I guess. In any event, it seems to me a pretty sketchy idea...at best.

3. Oh yeah - They scrapped the plan anyway.

[tucker342]

What a bad idea....

I don't see any benefit at all

[Ryan S]

I don't really care about the ethics of the thing, but it all seems utterly pointless to me.

[Fidatelo]

Wouldn't this just be a windfall for Osama?

"In recent news, [email protected] has won for the 3rd time in 4 months on the TerrorAttack Futures Market. In his most recent success, he correctly guessed that the Fleet Centre in Boston would be blown up on the 13th of August at 3pm by two Islamic men in a utility van loaded with plutonium. His payout of $40 million dollars raises him to number 1 on the money board with a total of $84 million in winnings. He is followed by [email protected], who won a record $56 million dollars for guessing that Iraqi loyalists would burn 14 US controlled Oil Fields in a 4 hour period sometime in mid June."

[EagleFan]

Why would a terrorist organization want to tip their hand by betting on their own attacks? If their idea is to, for example, nuke the white house than wouldn't it make more sense for them to place their money on something else to divert attention.

Using EM's example:
Nuke the White House: 50 to 1
Suicide bombers in New York city: 5 to 1

Why not place 100K on the nuke and 1 million on the suicide bombers. Plus spread the word among other terrorist groups that there will be suicide bombers, to get them to put the money on the suicide bombers. That way it causes a greater spike on the suicide bombers. You lose 1 million on that but win 5 million on the nuke.


But then again, they might not want to get caught insider trading.

[Subby]

What can this predict that our vast intelligence gathering network can't?

Don't answer that.

[clintl]

Originally posted by EagleFan
Why would a terrorist organization want to tip their hand by betting on their own attacks? If their idea is to, for example, nuke the white house than wouldn't it make more sense for them to place their money on something else to divert attention.

Don't you think that it's possible organized crime with no political agenda would find it potentially profitable to stage "terrorist" attacks? That is something these organizations probably wouldn't shy away from if they thought they could make a buck doing it, and their affinity for the gambling business is well established. This thing was rife with possibilities for abuse that could get thousands of innocent people killed.

[QuikSand]

In related news, it looks like the "brains" behind this one is on his way out:

Poindexter to Leave Pentagon

[KWhit]

Originally posted by QuikSand
In related news, it looks like the "brains" behind this one is on his way out:

Poindexter to Leave Pentagon

No big loss there.

[Castlerock]

Before you crap all over this idea check out for a different perspective. http://www.nytimes.com/2003/07/31/business/31SCEN.html

I admit, I thought it sounded like a pretty bad idea when it was reported in the papers. But what was proposed is not what was reported. Since I think you need to register with the Times, here is the text:


THE Pentagon-sponsored futures market in terrorism indicators was announced and squashed in all of two days. Too bad. It was a good idea, killed by terrible public relations.

Consider the problem that intelligence agencies face. They have to consider the likelihood of various destabilizing events — like assassinations or terrorist attacks. That's a major part of their job; there's no way around it.

In assessing such likelihoods they draw on expert opinion, but they also make considerable use of market data — oil price futures, currency exchange rates and the like — to see how market traders assess risks of political instability.

Markets do an awfully good job of forecasting many events and trends. The futures price for oil is about the best predictor available for this critical commodity, and it is widely used for forecasting by both political and economic analysts.

The question is whether speculative markets would work well for other policy-relevant events.

There is lots of evidence that they do. The Iowa Electronic Markets, www.biz.uiowa .edu/iem/, has been predicting election results for 12 years using a system very much like the one that the Defense Advanced Research Projects Agency at the Pentagon proposed.

One of the markets the Iowa exchange offered was in vote shares: what fraction of the vote went to the Democratic or Republican candidate. It is particularly easy to assess the outcome of such a market and to compare it with alternative forecasts, like public opinion polls.

As it turns out, these political stock markets provided somewhat better forecasts than polls right before the election — and they provide much better (and less volatile) forecasts several months before the elections. Thus, markets do best exactly where the public opinion polls and expert opinion polls are weakest.

This is not an isolated example. Similar markets have been organized to predict shifts in Federal Reserve monetary policy, the outcome of political conventions and sales of consumer products. The results are that markets typically perform at least as well, and generally better, than feasible alternatives, and they are much cheaper to organize.

An online betting site based in Ireland, tradesports.com, is currently offering markets in "Kobe Bryant to be found guilty," "Next Supreme Court justice to leave bench," and "Gray Davis to be California governor on Dec. 31, 2003." Those concerned about the outcome of these events might be well advised to take a look at the odds, which reflect bettors' sentiments.

There is good reason to believe that a market set up to forecast the sort of political instability that leads to terrorism might work well, too. At least, there is enough reason to warrant an experiment, given the high payoff to having better forecasts of these events.

This is why the Pentagon thought it was important to finance research in this area.

The objections raised by politicians and opinion writers were generally based on misunderstandings of what was actually proposed.

Take the claim that terrorists could speculate in their own future activities and reap a windfall. First, the maximum gain from a trade was restricted to less than $100. This would not be of much help to terrorists' fund-raising activities.

Second, the market would have been monitored for evidence of insider trading. If someone managed to circumvent the trading limits and made a significant amount of money speculating on a terrorist attack, you could be sure the C.I.A. would be right behind the I.R.S. in investigating.

If the federal authorities were alert enough to find enough evidence to indict Martha Stewart, why would one think that Osama bin Laden would be able to avoid detection?

There were also objections that the auctions were immoral.

Senator Byron L. Dorgan, a Democrat of North Dakota, asked what would happen if another country set up a betting parlor where people wagered on the assassination of an American political figure.

I'm sure he is right that there would be public outrage. But let's turn the question around: If such a market were put in place, should the Secret Service monitor it? If there were an assassination attempt, should the authorities look for suspicious prior trading activity? And the most important question of all: If the market indicated that the probability of an assassination attempt went up, should the target take extra care? If you were a potential target, wouldn't you want the best possible forecasts of possible attempts on your life? I would.

I would also prefer that such forecasts not be quite so public. A private market in the probability of specific assassination attempts — say within an expert community like the C.I.A. — could make sense, assuming, of course, that it provided useful information.

Would Mr. Dorgan object to such an internal market as a way of aggregating expert opinion? I hope not.

In any event, assassination futures were not among the planned securities, contrary to most press reports. The market design allowed traders to propose securities in various events, and the Policy Analysis Market Web site speculated that some traders might propose to add securities in assassinations. That off-the-cuff speculative remark had fatal consequences, alas.

The securities that were an essential part of the auction design were indexes of political, economic and military activity. The most useful such market would probably have been a market for futures in a "political instability index," a weighted average of various political indicators, like the number of mass demonstrations, unemployment levels, arrests — and, yes, assassination attempts. (Type "political instability index" into Google for some examples.)

If the markets had been pitched in this way, I doubt that there would have been many objections raised.

But instead politicians, reporters and editorial writers mistakenly jumped onto "assassination and terrorist attack futures" as a fundamental part of the market design.

Given the public outcry, it seems clear that there will not be a public market in assassination futures anytime soon. But there is no reason not to have a futures market in political, military and economic indicators, which is what the Pentagon's project was actually about.

We desperately need better ways to forecast political instability, and the Policy Analysis Market had significant promise. It's sad to see poor public relations torpedo a potentially important tool for intelligence analysis.