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BBC News Online: Business


Thursday, 14 February, 2002, 15:13 GMT

The economics of the Olympic Games


By BBC News Online's James Arnold

Whoever called economics "the painful elaboration of the obvious" may have had a point.

After crunching data from five decades of Olympics, two Harvard economists have deduced that cold countries perform better than hot ones in the winter games, and that large states produce more athletes than their smaller neighbours.

Monique Garbrecht-Enfeldt of the German speed-skating team

But Daniel Johnson and Ayfer Ali have come up with some more startling conclusions from their econometric analysis of the games.

Britain, they say, will win four medals at these Winter Olympics, up from the one it scored in 1998, and Germany will top the list with 10 more gongs than its nearest competitor.

And along the way, the authors intriguingly dissect the sometimes complex relationship between wealth and sporting achievement.

Model behaviour

Mr Johnson and Ms Ali have approached the Olympics as they would any rich database of statistical information.

Speed-skaters

By mining back through past performance, using at times bewildering statistical techniques, they aimed to isolate factors that contribute to Olympic success, and therefore to draw up a model for predicting future performance.

Their previous forecasting model claimed an 86% success rate for the Sydney Olympics two years ago.

For these games, the economists have factored in wealth - in terms of gross domestic product (GDP) per head - and political factors such as the level of multi-party democracy.

Crucially, they also laid great stress on geographical factors, such as latitude and average temperature.

Number-crunching

Arguably the most interesting parts of their paper are the incidental statistical trivia thrown up by burrowing through five decades of Olympic data.

Tips for the top

The fruit of all this number-crunching is a confident forecast of the medals tally at Salt Lake City.

Germany, which topped the list in 1998, remains number one, although by a far wider margin than previously.

Part of that lead has been caused by the slippage of Norway, which Russia is tipped to beat for second place.

The US, enjoying home advantage, draws level with Norway.

And the paper's emphasis on economic factors sees surprising success from some small, rich countries: Switzerland, Sweden, Iceland and Luxembourg are predicted to score highly as a result of their combinations of cold climates, high income per capita and small populations.

Britain, a perennial also-ran at winter games, is forecast to collect four medals, including one gold, because of its wealth and the fact that it does snow, albeit sparingly.

The price of gold, silver or bronze

On the basis of the authors' calculations, it is possible to work out how much it would cost to perform better at the Olympics.

Although there are certain anomalies - notably impoverished but sporty Romania - rich countries always perform best.

Swiss ski-jumper Simon Ammann

The Olympics, it seems, is an expensive business: to send an extra competitor, a country has to increase its GDP per head by $260.

An extra medal costs $1,700, and a gold $4,750, in terms of per-capita wealth.

The richer the country, the cheaper the marginal cost of improvement: Poland would have to spend four times as much per head as would the US, in order to boost its presence at the games.

Caveats and warnings

Not being sports experts, the paper's authors are reluctant to place too much emphasis on their conclusions.

The British team in Salt Lake City

"Instead of reading these predictions as a gambling handbook to the Olympics, the careful reader should treat them as a guideline to how well nations would be expected to perform given their national economic and political attributes," they counsel.

And just in case you have already rushed to the betting shop, they add a soothingly aspirational conclusion.

"The purpose of this paper, and of the Olympic movement, is not to point out winners and losers but to understand the processes by which we strive to excel."

A good economist always hedges his bets.


Related to this story:
Sports sponsors to weather the gloom? (12 Feb 02 | Business) Sponsorship boost for Athens games (21 Nov 01 | Business) Beijing win is big business (13 Jul 01 | Business)


Internet links: Salt Lake City Olympics | Johnson and Ali, Olympics working paper |
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