Economics of Sports
Economics of Sports
·July 17, 2024
The Fletcher School at Tufts University
problem:
The success of an individual Olympic athlete reflects many factors, including talent, dedication, training, effort, experience, and even luck. But are there also country-level factors that influence which country wins the most gold medals? In international comparisons of medal wins, it is possible to predict with some accuracy the relative overall performance of each country's athletes. Characteristics such as population size and national wealth certainly play a role. Other factors, such as whether a country hosts the Olympic Games, may favor its own athletes. Furthermore, the success of a country's women in Olympic sports is representative of that country's broader gender equality.
In countries where women are more actively participating in the workforce, women also tend to perform better in international sporting competitions.
fact:
- A country's population size influences its chances of winning a medal at the Olympics. Countries with larger populations have a larger pool of potential athletes who can compete at a global level. For example, China, with its population of 1.4 billion, has a much larger pool of talent that may have naturally high levels of athletic ability compared to countries with smaller populations. At the most recent Tokyo Olympics (held in 2021 instead of 2020 due to COVID-19), China won the second most medals (89) after the United States (113). However, population alone does not explain a country's success at the Olympics. If it did, India, the second most populous country at the time, would have been expected to win far more medals than the seven at the Tokyo Olympics, and New Zealand, with a population of less than 5 million, would have been expected to win far fewer medals than the 20 awarded (see table).
Click here for a longer version of this table.
- Per capita income plays a bigger role than population in determining a country's success at the Olympics. People's ability to maximize their athletic potential depends on the opportunity to train with top coaches in first-class facilities, and these opportunities tend to be more abundant in richer countries. In 2002, economists Andrew Barnard and Megan Busse, who studied factors that determine Olympic success at the national level, found that real GDP was the best predictor of a country's performance. For example, Canada's population of 39 million is a fraction of China's. In 2022, Canada's GDP per capita was $58,400 and China's was $21,476 (both in U.S. dollars, taking into account the price difference between the countries, i.e. purchasing power parity). These differences in per capita income help explain why the difference in the proportion of medals awarded at the Tokyo Olympics was not as large, even though China's population is more than 36 times that of Canada. Chinese athletes won 89 medals and Canadian athletes won 24 medals. Bernard and Busse's findings in the early 2000s held true when I performed a similar analysis with Tokyo Olympics data. Holding population constant, a country with a per capita income 10 percent higher than the rest of the world is estimated to win 6.9 percent more medals, and a country with a population 10 percent larger than the rest of the world is estimated to win 3.6 percent more medals. Holding per capita income constant, [See here.]
- Factors other than income and population are also related to the success of the Summer Olympics. Bernard and Busse also found that hosting the Olympics tends to give a country's athletes an added advantage. Host countries tend to win 1.8% more medals than would be predicted based on GDP alone. Japan had its best ever performance at the Tokyo Olympics, winning 27 gold medals (58 overall), placing it third in gold medal count behind the United States and China. The countries that Bernard and Busse identify as having “forced resource mobilization” toward sporting success won a higher medal share than would be predicted based on per capita income and population alone. This result is supported by the results of Russian athletes competing under the ROC (Russian Olympic Committee) flag at the Tokyo Olympics, who came in third in total medals. I would estimate that this is more than double the number that ROC athletes would have been predicted to win, given Russia's income and population. Finally, the researchers found that success is sustainable. If you achieve a high medal win rate in the previous Olympics, you tend to achieve a higher medal win rate in subsequent Olympics.
- A country's success in the Olympics is linked to the economic opportunities available to them. Countries where women participate more fully in the workforce tend to have better female performances in international sporting events. We found that countries with higher female labor force participation rates won more medals by women at the 2000 Sydney Summer Olympics. When we updated the data, this result held true for the Tokyo Olympics. For example, Canada and Spain have similar populations and per capita income levels, but Canada's labor force participation rate is 61% (about the 75th percentile) compared to 53% (about the 25th percentile) for Spain. Canadian women won 18 individual and team medals in Tokyo (out of 24 won by Canada) while Spanish women won 6 (out of 17 won by Canada).
- The association between female sporting success and higher female labor force participation likely reflects greater opportunities for women overall in these countries. Just as a larger population gives an advantage in the Olympics, societies that offer more opportunities to a wider range of women may be able to draw from a wider talent pool, which may favour women’s teams in the highly competitive world of international sport. There are other possible explanations for what is behind this relationship. For example, countries with higher female labour force participation may have lower birth rates, meaning that young women have more opportunities to participate in sport rather than raising children. Alternatively, countries with higher female labour force participation may also have more women in government, in which case more public resources may be devoted to women’s sport. However, in my published research on the Sydney Olympics, the impact of higher female labour force participation on women’s sport success remains the same even after taking these other possible explanations into account.
The Summer Olympics have attracted an average of 3 billion viewers worldwide since the 2008 Beijing Games. People watch to see high-level athletics, the drama of world-class competition, and often to cheer on their country's athletes. The success of a country's athletes in Olympic competition reflects their skills and abilities, and there are important economic and social factors behind it.
topic:
Sports Economics / Labor Force Participation