Medal Model

Economists predict who will get the gold in Athens.

Economics of gold-getting

So far, most of the economic discussion surrounding the Olympics has centered on how much of a jolt the games will deliver to Greece’s economy and the size of swimmer Michael Phelps’ endorsement contracts.

But a team of number crunchers at PriceWaterhouseCoopers has been feeding data on countries’ economies, populations, political histories, and past performances into a model that aims to provide a benchmark for expected medal hauls. The London-based crew asserts that the model “is able to explain nearly 90% of the variation in medal shares across countries in recent Olympic Games.”

For Olympians, is macroeconomics destiny? Generally speaking, the PwC study shows that countries with the largest populations, the best economic growth, and the best past performances should do well in 2004. “The number of Olympic medals won is directly proportionate to population and/or income level increases,” PwC notes. Among all the factors, “GDP matters most in predicting Olympic performance.”

It makes sense that countries with the most resources and the largest pool of potential athletes will excel in a competition that features hundreds of different events. “If you’re on the poverty line, you don’t have a lot of time to invest in sports,” said John Hawksworth, head of macroeconomics at PwC. Poor countries like Brazil can excel in soccer, the one truly global sport. But in nations where the horse is still the primary mode of transportation, not many people have the time or leisure to compete in dressage.

But other factors can make a big difference. Looking back at Olympic games since 1988, “on average, the medal share of the host nation has been approximately two percentage points higher than would otherwise have been expected,” PwC concludes. The model thus projects that Greece may be expected to more than double its 2000 total. It’s not just the extra shots of adrenalin provided by partisan home crowds, or the fact that Greek marathoners may have grown up running in the August heat. “It may be that if the Olympics is in a particular country, the government wants, as a matter of prestige, to do well, so they pump money into the games,” said Hawksworth.

One potentially counterintuitive finding: The countries of the former Soviet bloc, some of which have seen declines in living standards in the past 15 years, have continued to excel. The model projects impoverished Belarus, which won 17 medals in Sydney in 2000, to win 15 medals in Athens—the same number as prosperous Canada. The Soviet-era sports bureaucracies may have crumbled in Russia and its former republics, but the infrastructure that produced world-class wrestlers and gymnasts hasn’t dissolved entirely.

The model foresees little change at the top. As they did in 2000, the United States (70), Russia (64), China (50), and Germany (45) are expected to take home the greatest number of medals. But look closely, and each Olympic titan is projected to take home substantially fewer medals than it did in 2000. And none is expected to fall further than the United States. What’s more, the top 30 Olympic nations are projected to lose about 10 percent of their total. Meanwhile, the rest of the world—a large assemblage of Olympic also-rans—is expected to increase its medal take by 50 percent. As we were exerting our hegemony in the Middle East and Central Asia, were we (and our coalition partners) losing it in the high-jump pit and the swimming pool?

If so, there are two possible explanations. One is the pre-9/11 Thomas Friedman explanation. With the continuing flow of information, resources, and people all over the globe, those who excel at sports are increasingly able to train and compete against world-class competition. Kenyan distance runners receive scholarships to colleges in the United States, inner-city American fencers compete against aristocratic Europeans, Israel produces a world-class judoka, and Italy fields a competitive baseball team. The world today is a happy playground in which specialization and excellence are identified, developed, and rewarded.

The second is the Patrick Buchanan explanation: Lazy white FirstWorlders are about to be overwhelmed and outrun by hungrier, darker Third World residents. The model projects such big losses for established Olympic powers—and such big gains for nobodies—largely because of the influence of GDP growth. In the past four years, France and Germany have had comparatively little growth compared with, say, India and Mexico. So, France and Germany are projected to lose medals, while India’s total is expected to rise from one to 10 (!) and our neighbor to the south could win 11 medals, up from six in 2000. We may think the rich are getting richer. But the poor are getting richer at a more rapid pace. “What’s tended to happen is that the developing economies’ share of the global economy is increasing over time, and perhaps these countries are becoming keener on participation in the Olympics,” said Hawksworth.

Hawksworth produces another warning that echoes what one hears these days in economic circles: Look out for China. China may do better than expected in part because “with the Olympics coming up in Beijing in 2008, they seem to be setting a national priority,” said Hawksworth. “They’re kind of challenging the U.S. and Russia as the Olympic superpowers.”