Published in Insights, The New Zealand Initiative’s newsletter, 27 July 2012
With the London Olympics about to start, it is time to reveal the medal tally. China will win 102 medals (gold, silver and bronze), followed closely by the United States (100), Russia (71), and the United Kingdom (71). New Zealand will rank 24th with 10 medals in total.
If you believe it is impossible to know the outcome ahead of the games, you are obviously not an economist. We economists may have missed early warning signs of the global financial crisis, but our discipline is still good enough to predict the results of major sports events. At least on average.
Researchers at Bochum University, my alma mater, have developed an ingenious model that allows them to forecast the Olympics medal tally. The model retrospectively calculated the medal tally at the Athens 2004 and Beijing 2008 Olympics with 97.4 per cent and 96.9 per cent accuracy respectively (and the benefit of hindsight). The German economists are confident that it will be no different for London 2012.
The medal model uses a wide range of factors that influence a country’s sports achievements. It is based on past performance since the 1960 Rome Games.
Population size is an obvious factor, as is home advantage for host nations. GDP per capita is important – richer countries can afford better sporting facilities and the population spends more on leisure activities. Government sports subsidies also play a role, particularly in Beijing 2008, when China tried to replace the United States at the top by spending US$4.5 billion on its athletes – or about US$88 million per gold medal (China won 51 gold medals to America’s 36 but came behind the latter’s overall tally of 110 medals by 10 medals).
But the Bochum economists also discovered another surprising factor: the role of women in society. Countries where men and women have equal rights and opportunities do better at the Olympics. By contrast, women’s sports potential has not been fully utilised in countries that systematically disadvantage its female population.
At its most extreme, this is true for countries such as Saudi Arabia, Qatar and Brunei who until this year had failed to even nominate any female athletes. Women cannot win if they are not participating.
There is a lesson here for economic policy beyond the Olympics, particularly for those developing countries where full female emancipation is still a distant dream. They are not only harming their female population but also diminishing their country’s overall potential.
In the meantime, we will be watching the London Olympics with interest – if only to see whether our economist colleagues got their forecast right.
