“U.S.A.! U.S.A.! U.S.A.!”
If you have heard that chant from the cubicle next to yours recently, it is probably because your co-worker has been sneaking in some quality Olympic Games watching time. Not that you would ever do that. However, plenty of people it seems are showing their patriotism by shortchanging their employers.
According to reports, the high usage of the opportunity to stream events (live or archived) has increased estimates of lost productivity for U.S. companies from $650 million — before the London Games — to $1.39 billion. But who is counting as long as the United States wins the “unofficial” Olympic gold medal competition this time after China won more gold medals in Beijing (overall, the U.S. had 110 [36, 38, 36] to China’s 100 [51, 21, 28] medals).
Four years ago, this column (available here: http://bit.ly/NkInGa) discussed research demonstrating that national income and population are strong predictors of the precious-medal output. However, no effects of education or life expectancy were established.
Of course, economists are nothing but predictable. So some German professors were at it again this year asking about the (economic) determinants of sporting success (available at: http://bit.ly/P3TGQQ). All they could find was more evidence of correlation between population size and medal counts (and, curiously, between GDP and medal counts in Winter Olympics only).
Some more interesting factoids came from a non-academic source.
Goldman-Sachs put out what they described as a “light-hearted look at the Olympics and Economics” (available at: http://bit.ly/Mmyz9I). Who knew that the hard-hitting traders at Goldman-Sachs could spare time for such frivolous activities? But an entertaining read it is.
From some of the figures collected by the numbers crunchers one can learn that “Emerging Markets Now Win Half of All Olympic Medals” and that the percentage of female athletes has increased from something that looks suspiciously close to zero in 1896 to a number closing in on 50 percent in 2008.
One eternal question is whether hosting the Olympics makes economic sense.
So called economic impact studies often have to rely on crucial assumptions and are therefore inconclusive. The consensus among economists seems to be that economies, which find themselves in somewhat of a slump, can significantly gain from hosting the games.
Also, as pointed out by the Goldman-Sachs publication, the games can promote cities and regions as tourist locations. London and the U.K. will probably fall into the first category but not in the second given how popular a destination the city already is.
One economist, writing in the “International handbook on the economics of mega sporting events,” views this more pessimistically and concludes: “The costs of the Olympic Games … are always higher than the returns in the host city or country.” This is probably something that the organizers of the Rio de Janeiro Games in 2016 may want to keep in mind.
However, this type of economic analysis does not take into account the pride and fun payoff from the games, as well as the fact host nations tend to greatly outperform their long-term Olympic medal trend. London may be another example of that return on investment. The U.K. had already surpassed expectations by winning 56 medals as of Friday compared to 30 in 2004 and 47 in 2008.
That makes them third behind China and top-ranked USA.
“U.S.A.! U.S.A.! U.S.A.!”
Dr. Michael Reksulak teaches economics and public finance in Georgia Southern University’s College of Business Administration. He may be reached by email at mreksula@georgiasouthern.edu.