Economics and Olympics: An Efficiency Analysis

Applying stochastic frontier analysis, we estimate the importance of sports in society as technical efficiency of countries in the production of Olympic success since the 1950s. Our measures of success are medal shares and a broader concept including Olympic diplomas. Following Bernard and Busse (2004), population and GDP are used as inputs. While the impact of GDP is always positive, we show that the sign of the population effect depends on wealth and population size of a country. The results show that the spread of importance is very wide over time, across countries, gender, and sports. These differences can be seen as caused by differences in financial support, training methods, organization, or culture. Using the method proposed by Battese and Coelli (1995), we confirm the result well documented in the literature that planned economies and host countries are more successful than others in terms of Olympic success (e.g. Bernard and Busse, 2004). The method allows to shed light on important aspects of recent sport history, such as the consequences of the breakdown of the former Soviet Union.