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Going for the Gold: The Economics of the Olympics

Listed author(s):
  • Robert A. Baade
  • Victor A. Matheson

In this paper, we explore the costs and benefits of hosting the Olympic Games. On the cost side, there are three major categories: general infrastructure such as transportation and housing to accommodate athletes and fans; specific sports infrastructure required for competition venues; and operational costs, including general administration as well as the opening and closing ceremony and security. Three major categories of benefits also exist: the short-run benefits of tourist spending during the Games; the long-run benefits or the "Olympic legacy" which might include improvements in infrastructure and increased trade, foreign investment, or tourism after the Games; and intangible benefits such as the "feel-good effect" or civic pride. Each of these costs and benefits will be addressed in turn, but the overwhelming conclusion is that in most cases the Olympics are a money-losing proposition for host cities; they result in positive net benefits only under very specific and unusual circumstances. Furthermore, the cost–benefit proposition is worse for cities in developing countries than for those in the industrialized world. In closing, we discuss why what looks like an increasingly poor investment decision on the part of cities still receives significant bidding interest and whether changes in the bidding process of the International Olympic Committee (IOC) will improve outcomes for potential hosts.

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File URL: https://www.aeaweb.org/articles?id=10.1257/jep.30.2.201
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File URL: https://www.aeaweb.org/jep/ds/3002/30020201_ds.zip
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Article provided by American Economic Association in its journal Journal of Economic Perspectives.

Volume (Year): 30 (2016)
Issue (Month): 2 (Spring)
Pages: 201-218

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Handle: RePEc:aea:jecper:v:30:y:2016:i:2:p:201-18
Note: DOI: 10.1257/jep.30.2.201
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  1. Giles Atkinson & Susana Mourato & Stefan Szymanski & Ece Ozdemiroglu, 2008. "Are We Willing to Pay Enough to `Back the Bid'?: Valuing the Intangible Impacts of London's Bid to Host the 2012 Summer Olympic Games," Urban Studies, Urban Studies Journal Limited, vol. 45(2), pages 419-444, February.
  2. Robert A. BAADE & Robert W. BAUMANN & Victor A. MATHESON, 2010. "Slippery Slope ? Assessing The Economic Impact Of The 2002 Winter Olympic Games In Salt Lake City, Utah," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 31, pages 81-92.
  3. Dennis Coates & Brad R. Humphreys, 2008. "Do Economists Reach a Conclusion on Subsidies for Sports Franchises, Stadiums, and Mega-Events?," Econ Journal Watch, Econ Journal Watch, vol. 5(3), pages 294-315, September.
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  7. James A. Giesecke & John R. Madden, 2011. "Modelling the Economic Impacts of the Sydney Olympics in Retrospect – Game Over for the Bonanza Story?," Economic Papers, The Economic Society of Australia, vol. 30(2), pages 218-232, 06.
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  10. Arne Feddersen & Wolfgang Maennig, 2013. "Mega-Events And Sectoral Employment: The Case Of The 1996 Olympic Games," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 580-603, 07.
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  12. Harry Walton & Alberto Longo & Peter Dawson, 2008. "A Contingent Valuation of the 2012 London Olympic Games," Journal of Sports Economics, , vol. 9(3), pages 304-317, June.
  13. Stephanie Jasmand & Wolfgang Maennig, 2008. "Regional Income and Employment Effects of the 1972 Munich Summer Olympic Games," Regional Studies, Taylor & Francis Journals, vol. 42(7), pages 991-1002.
  14. Stephen B. Billings & J. Scott Holladay, 2012. "Should Cities Go For The Gold? The Long-Term Impacts Of Hosting The Olympics," Economic Inquiry, Western Economic Association International, vol. 50(3), pages 754-772, 07.
  15. Baumann Robert & Engelhardt Bryan & Matheson Victor A., 2012. "Employment Effects of the 2002 Winter Olympics in Salt Lake City, Utah," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), De Gruyter, vol. 232(3), pages 308-317, June.
  16. Markus Brückner & Evi Pappa, 2015. "News Shocks in the Data: Olympic Games and Their Macroeconomic Effects," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 47(7), pages 1339-1367, October.
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