Why economics and sports don't mix.

Why economics and sports don't mix.

Why economics and sports don't mix.

Moneybox
Commentary about business and finance.
Aug. 30 2004 5:18 PM

Medal Miscount

The economists' Olympic predictions were mostly wrong.

Olympic medals
Olympics predictions mettle

This is why they play the game.

On the eve of the Olympics, I wrote about a PriceWaterhouseCoopers study that used data on national economies, populations, political histories, and past performances to project the overall medal count. I should also have pointed out a second model constructed by economists Andrew B. Bernard and Meghan Busse of Dartmouth and the University of California at Berkeley, respectively.

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Both studies projected that while traditional powers like the United States, Russia, China, and Germany would impress in Athens, top nations would take home fewer medals than they did in 2000. "Olympic riches will be more widely distributed than before as the number of medals going to the top countries declines," Bernard and Busse wrote. PwC projected that the United States' medal haul might fall some 30 percent. Both foresaw that host nation Greece would more than double its 2000 medal count. PwC, in its boldest forecast, said India was in line to boost its medal count from one to 10.

So how'd they do? If I were a gymnastics judge, I'd give them a 9.3—a respectable performance, but out of medal contention. Let's review the numbers. According to the official medal count, the haul of the top 30 countries fell to 706 medals, pretty close to PwC's projection of 703 medals. But both models misfired in projecting that the traditional powers would sag. The United States instead increased its medal total from 2000 by more than 6 percent, from 97 to 103 *. Strike one blow for American hegemony! Russia, predicted by PwC to lose nearly 30 percent of its 2000 medals, increased its take from 88 to 92. Despite the images of decrepit gymnastics training facilities that NBC continually aired, Communist-era sporting habits die hard. China likewise increased its medal share. Australia and Germany, which finished fourth and fifth, respectively, in the 2000 medal race, both saw their total medals decline, but not by as much as PwC expected. (In winning 49 medals, the dynamic Aussies may have permanently passed stagnant Germany in the summer Olympics pecking order.)

According to the theory, the rapidly developing world was supposed to gain medals at the expense of the slower-growing developed world. But that didn't quite happen. In fact, the rich generally got richer, and medal wealth remained concentrated. In 2004, 75 different countries won medals, down from 80 in 2000.

So who disappointed? Hosts Greece, perhaps hamstrung by the withdrawal of their best sprinters, didn't come anywhere near doubling its total—it won 16 medals in Athens, compared with 13 in Sydney. Perhaps the adrenaline and extra motivation provided by home crowds doesn't make up for a small population. India disappointed PwC (and a billion Indians) by once again mustering only a single medal—proving that developing countries with huge populations need robust sports infrastructures in order to produce world-class athletes. And Mexico, which should have won 10 medals according to PwC, only took home four.

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The models might prove somewhat more accurate in 2008 if they tried to account for another important economic variable: a nation's openness to human capital. Some nations have comparative advantages when it comes to certain sports (the Americans in basketball, the Norwegians in cross-country skiing) and comparative disadvantages in others (the Austrians in beach volleyball and the Jamaicans in bobsledding). But the free movement of people can alter the dynamics of sports. Slovenia, a country without much of a sprinting tradition, was represented in Athens by Jamaica-born sprinting icon Merlene Ottey.

It's not simply a matter of countries being willing to bestow citizenship on athletes who are already champions. They must also welcome athletes earlier, before they are stars, or before they are even athletes. Middle-distance runner Wilson Kipketer, born in Kenya, competed for Denmark—a country in which he permanently settled after attending college there. Israel's Olympic contingent was thick with wrestlers and track competitors who had been welcomed as immigrants from the former Soviet Union because they were Jews, not because they were athletes. But as always, the United States provided the best example of the advantages nations can gain from immigration. The medal-winning gymnastics team featured Cuba-born Annia Hatch and Mohini Bhardwaj, the daughter of immigrants from India. Marathon silver medalist Meb Keflezighi was born in Eritrea and moved to the United States at the age of 10. Lenny Krayzelburg, born in Odessa, in the former Soviet Union, competed on the men's swim team. (I'm sure there were many other examples of which readers will inform me.)

For years, economists have been telling us that nations that can attract and assimilate the best human talent will have a leg up on their international competition. When it comes to the Olympics, that may be literally true.

Correction, Sept. 3, 2004: The article originally said the United States increased its medal total by "nearly 10 percent." In fact, the United States won 97 medals in 2000, so 103 is about 6.2 percent more. Return to the corrected sentence.