Accelerating Democracy With Big Data

CHICAGO --- The effectiveness of prediction markets played out in a dramatic fashion during the presidential election. The information markets -- in which people bet on future events over the Internet -- were much more effective than polls in predicting the vote shares of President Barack Obama and Gov. Mitt Romney.

Such information markets could similarly foretell policy results as they predicted the outcome of the election, according to a new book by John O. McGinnis, a professor at Northwestern University School of Law.

In “Accelerating Democracy: Transforming Governance Through Technology” (Princeton University Press, Jan. 21, 2013), the Northwestern scholar urges government to harness prediction markets that have gotten increasingly more sophisticated with the rise of the Internet to address important policy issues.

Such markets, he argues, would provide a visible hand to guide policy results.

Information markets could, for example, predict the consequences of changes in educational policy on educational outcomes or in a stimulus program on economic growth.

Government needs to take advantage of the evolving computational power that is providing extraordinary new tools to help predict the results of future policies even before they are implemented, he says.

Information technology could play an important role in helping ease the nation’s bitter political divide, according to the book.

“The use of such data would make it difficult for people to adhere so blindly to their ideological views,” McGinnis says. “This book is about forcing people to confront the facts through better use of information technology tools that we have in our hands today. 

One of the biggest problems in moving forward, McGinnis argues, is government’s misguided policies about prediction markets. “Government understands them to be sort of like Internet gambling and essentially impedes the operations of these for-profit prediction markets,” he says.

Instead, government should be creating structures that help create and use big data, according to the book.

“The government has to completely change its orientation from one of restriction to one of promotion of these markets,” says McGinnis. “That’s one of the core and very concrete proposals of the book.”