Governments, sport and happiness

Early next month we’ll learn whether Australia has won the hosting rights rights to the FIFA World Cup in 2022. Surprisingly, given this would entail such a large amount of government expenditure, discussion in the media relates only to the tactics of the bidding team and the horse race implications of corruption in FIFA. Perhaps an issue has to be tied to short run party political fortunes (such as the NBN or public transport) to bring up media sound and fury? Or maybe you need to be tied to a Great and Good personage (in this case Frank Lowy) to assure everyone that it is a serious and reasonable matter (he is fabulously wealthy after all, he must be a very serious man).

Regrettably I’m unable to write much on it at the moment either due to base physical constraints, but I do want to point people’s attention to this paper by Kavetsos and Szymanski (also treated in popular form in Soccernomics).  Hosting major sporting events may not give you good infrastructure, they don’t expand the economy,  and they don’t increase participation…but they might make you happy, a end to which money’s effectiveness is notoriously debatable.

The widely proclaimed economic benefits of hosting major sporting events have received substantial criticism by academic economists and have been shown to be negligible, at best. The aim of this paper is to formally examine the existence of another potential impact: national wellbeing or the so-called “feelgood” factor. Using data on self-reported life satisfaction (happiness) for twelve European countries we test for the impact of hosting and of national athletic success on happiness. Our data covers three different major events: the Olympic Games, the FIFA World Cup and the UEFA European Championship. We find that the “feelgood” factor associated with hosting football events is large and significant, but that the impact of national athletic success on happiness, while correctly signed, is statistically insignificant.

The debates over the usefulness of measures of subjective wellbeing are well trod (and are canvassed in the article) so we need not retread them here (though I think for all their flaws, they’re no worse than utility). The writers make interesting comparisons within the confines of this measure. Based on regression coefficients, hosting a football tournament is roughly the same magnitude as being married, 0.6 times the magnitude of moving from the 2nd to the 3rd income quartile and 0.3 the magnitude (the other way obviously) of becoming unemployed. Given the difficulties achieving any of those by government policy, a major event might be a bargain.

What strikes me though is the comparison with athletic success. Given the elite sport lobby is uncritically quoted as saying the nation’s self esteem is reliant on the gold medal tally, this research provides a wonderful opportunity to redirect funding away from John Coates athlete mills (the kind of thing that should have perished with the German Democratic Republic) and towards something that might actually perform at the criteria they claim. Even disregarding the happiness factor, it might be preferable to know that money is to be wasted, let it be in white elephant stadiums rather than the petulant brats we sent to Delhi.

About Richard Tsukamasa Green

Richard Tsukamasa Green is an economist. Public employment means he can't post on policy much anymore. Also found at @RHTGreen on twitter.
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6 Responses to Governments, sport and happiness

  1. conrad says:

    “Perhaps an issue has to be tied to short run party political fortunes (such as the NBN or public transport) to bring up media sound and fury?”

    I think the motor GP in Victoria is getting more of a media hiding as the years pass and the expense grows (unlike the motocycling and golf), even though it isn’t really tied to political fortunes, so that would be an existence proof against that claim.

    Perhaps you can do everyone down here in Melbourne a favour (or at least lots of people and many ducks), and encourage Sydney to try a bit harder to take the GP, and we could test your theory as well as get rid of it :).

    “Given the elite sport lobby is uncritically quoted as saying the nation’s self esteem is reliant on the gold medal tally”

    They also claim that elite sport encourages non-elite people to do sport, and therefore helps population health. As far as I can tell, the evidence for that for people over about 25 is zero.

  2. The Beverage Curve says:

    Much as I would love to have the World Cup in Australia and observe the beautiful game up close I see no reason why the government should be putting money into it.

    Mind you given the punters think it is a good thing it is no wonder this is a bi-partisan policy but then they want to raise tariffs as well.

  3. Guy says:

    I definitely think there is a decent economic case for the government contributing money to the World Cup campaign. It really comes down to picking winners at the end of the day. The Melbourne F1 is not a winner at the moment. F1 is not the best trackside spectator sport, quite frankly. On the other hand, bringing Tiger Woods down under immediately before his “great collapse” was a huge money-spinner and well worth the Victorian Government’s investment.

    I think a lot of Europeans would see an Australian World Cup as the perfect excuse to (finally) visit Australia, not to mention fans from the Asian powerhouses; Japan and South Korea. It’s hard to believe it wouldn’t be a massive win for the tourism industry.

  4. The Beverage Curve says:

    A similar argument was made for the Olympics and it didn’t happen.

    Of course fans of the beautiful game are far morel likely to turn up.

    We gained a few white elephants from the Olympics.

    Could we use all of the stadiums built for the World cup?

  5. Richard Green says:

    Conrad – The prospect of bringing the GP to Sydney is actually pretty much unheard of in the NSW press. The prospect of events currently being held in the city being “pinched” by other cities is prominent however (as it is in the SA and WA press which I have to read). It’s quite amazing how the spruikers of these events manage to keep the spectre of interstate event snatchers haunting the headlines of journalists and politicians’ attitudes, especially compared to the few examples of it actually occurring.

    Guy – I will still profess great skeptitude about the Wood’s effect. A large part of the reported benefits was a financial estimate of how much the marketing cost of equivalent exposure would cost – and that depends on whether you think that amount of marketing actually brings tangible benefits. It also included money spent by Melbournites on or near the event, or people who were visiting Melbourne anyway. If they hadn’t spent the money Woods gazing, the default assumption would be that the money would have been spent in Victoria anyway. It is admittedly difficult to create a decent calculation of the dollars spent by people who would have decided to spend their money interstate or internationally and did otherwise because of Woods, but the onus is on the spruikers to create one – rather than relying on spurious measures or extolling the benefit of getting a column inch about the event in the guts of the NYTimes.

    Beverage – The white elephants might be a bit less white, since we still watch football codes after the event (whereas interest archery and baseball dropped dramatically after the Olympics), but of course, the Olympic stadium is a terrible burden. And public transport improvements might be better since the stadiums to be used are much closer to existing activity centres than Homebush bay was/is, including centres that can be expanded like Blacktown. But by and large, yes, the infrastructure benefits are moot.

  6. derrida derider says:

    Panem et circenses do indeed work to make people happy. I’ve always thought that’s the way pollies should sell them – “we can afford it at the moment, so let’s have a party”. That’s far better than the (usually actively dishonest)
    “economic” cases made for these sort of events.

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