ECONOMICS REPORT - Using the 'Wisdom of Crowds' to Tell the

ECONOMICS¹ REPORT - Using the 'Wisdom of Crowds' to Tell the Future
By Mario Ritter

Broadcast: Friday, November 11, 2005

I'm Doug Johnson with the VOA Special English Economics Report.

Intrade is a trading exchange for politics, current events and all sorts of other future happenings. It is similar in some ways to a futures² market. But its contracts are only for small amounts. And they do not offer price protection. Instead, Intrade can be seen as a place to test the wisdom of crowds.

"The Wisdom of Crowds" is the name of a two thousand four book by James Surowiecki. He argues that large groups often make better decisions than a few experts. Intrade is credited³, for example, with correctly choosing how all fifty states would vote in the American presidential election⁴ last year.

 
A wise-looking group?
Still, the Irish company that owns Intrade and two other Web sites recently got into trouble in the United States. On October fourth, a federal⁵ agency⁶ settled a case with the Trade Exchange Network Limited.

The Commodity⁷ Futures Trading Commission⁸ found that the company had offered some kinds of contracts banned by the agency. The company did not admit or deny it, but agreed to pay a fine of one hundred fifty thousand dollars.

Commodity futures involve widely traded goods like oil, grain, energy and gold.

Futures trading requires two kinds of traders. One wants to protect against price changes, the other wants to profit from them. It can be highly⁹ complex. But imagine a farmer is worried about soybean prices. The farmer thinks prices will rise in the future -- but has a crop to sell now. Say the current price is five dollars a bushel.

The farmer can purchase a contract to buy (yes, buy) fifty thousand bushels of soybeans at the current price, but not for three months.

In three months, the market price is six dollars. The farmer can now use the contract to buy the soybeans at five dollars a bushel. The farmer does not get the fifty thousand bushels. Instead, the farmer gets fifty thousand dollars -- the difference between the market price and the contract price.

How? Well, the seller¹⁰ of the contract thought soybean prices would go down. When the price went up, the seller was responsible for the full market value.

Had prices dropped, the farmer would have lost only the money to buy the contract, a small part of the full value. All buying and selling on an futures exchange takes place through a single organization, a clearinghouse. Real goods are rarely exchanged, only money.

This VOA Special English Economics Report was written by Mario Ritter. I'm Doug Johnson.

1 economics   

n.经济学，经济情况

参考例句：

• He is studying economics,which subject is very important.他正在学习经济学，该学科是很重要的。
• One can't separate politics from economics.不能把政治与经济割裂开来。

2 futures   

n.期货，期货交易

参考例句：

• He continued his operations in cotton futures.他继续进行棉花期货交易。
• Cotton futures are selling at high prices.棉花期货交易的卖价是很高的。

3 credited   

v.记入贷方；信用

参考例句：

• Cook is credited with discovering Hawaii. 人们把发现夏威夷的功劳归于库克。
• The cheetah is generally credited as the world's fastest animal. 猎豹被公认是世界上跑得最快的动物。 来自《简明英汉词典》

4 election   

n.选举，选择权；当选

参考例句：

• There is no doubt but that he will win the election.毫无疑问，他将在竞选中获胜。
• The government will probably fall at the coming election.在即将到来的大选中，该政府很可能要垮台。

5 federal   

adj.联盟的；联邦的；(美国)联邦政府的

参考例句：

• Switzerland is a federal republic.瑞士是一个联邦共和国。
• The schools are screaming for federal aid.那些学校强烈要求联邦政府的援助。

6 agency   

n.经办；代理；代理处

参考例句：

• This disease is spread through the agency of insects.这种疾病是通过昆虫媒介传播的。
• He spoke in the person of Xinhua News Agency.他代表新华社讲话。

7 commodity   

n.日用品，商品，物品

参考例句：

• The authorities took measures to roll commodity price back.当局采取措施使物价全面回降。
• Commodity prices remain stable and there are plenty of goods on the market.商品价格稳定，市场货源充足。

8 commission   

n.委托，授权，委员会，拥金，回扣，委任状

参考例句：

• The salesman can get commission on everything he sells.这个售货员能得到所售每件货物的佣金。
• The commission is made up of five people,including two women.委员会由五人组成，其中包括两名妇女。

9 highly   

adv.高度地，极，非常；非常赞许地

参考例句：

• It is highly important to provide for the future.预先做好准备非常重要。
• The teacher speaks very highly of the boy's behaviour.老师称赞这个男孩的表现。

10 seller   

n.售货者，畅销品

参考例句：

• I hope for this book to become a best seller.我希望这本书会成为一本畅销书。
• She drove a hard bargain with the seller.她狠杀卖主的价。