Going for the Gold

The Economics of the Olympics

Bibliographic Data

ID4826432
AuthorsRobert A Baade (Robert A. Baade is A. B. Dick Professor of Economics, Lake Forest College, Lake Forest, Illinois.), Victor A Matheson (Victor A. Matheson is Professor of Economics, College of the Holy Cross, Worcester, Massachusetts.)
Year2016
Volume30
Issue2
Pages201-218
Publication date2016-05-01
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueThe Journal of Economic Perspectives (JOURNAL)
Journal identifiersISSN: 0895-3309 • E-ISSN: 1944-7965
PublisherAmerican Economic Association (PUBLISHER • US)
DOI10.1257/jep.30.2.201
OpenAlexW2345869147
LanguageEN
Citations received73
References cited14

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

Bidding · Business · Cost–benefit analysis · Economics · Political science · Politics · Public economics · Tourism · Law · Sport and Mega-Event Impacts · Sports Analytics and Performance · Sports, Gender, and Society · Finance · Marketing