By BINYAMIN APPELBAUM AUG. And Brazil is only getting started.
China Counts the Cost of Hosting the Olympics - WSJ
The idea that big sporting events are good for growth is relatively new. The Olympics and the World Cup are now routinely described as economic engines. Four American cities — Boston, Los Angeles, San Francisco and Washington — recently announced that they were flirting with hosting the Summer Olympics, and in each case a justification was economic development.
Such claims are based on the idea that the Games can serve as a tourist attraction, a chance to catch the eye of global business leaders and a way to rally political support for valuable infrastructure projects.
The lean and profitable Los Angeles Olympics are often invoked.
But there is strikingly little evidence that such events increase tourism or draw new investment. Spending lavishly on a short-lived event is, economically speaking, a dubious long-term strategy. Stadiums, which cost a lot and produce minimal economic benefits, are a particularly lousy line of business.
This is why they are usually built by taxpayers rather than by corporations. And even though Brazil, like other recent hosts, has sought to make stadium spending more palatable by also building general infrastructure, like highways and airports, the public would derive the same benefit at far less cost if the transportation projects were built and the stadiums were not.
The Los Angeles Olympics were successful, after all, because planners avoided building new stadiums. Barcelona, long neglected under the rule of Francisco Franco, was in the midst of a renaissance that would have probably occurred without the Olympics. While many facilities remain in use after the Games or are converted for new purposes, quite a few sit virtually as empty as the original in Olympia, Greece.
A fair comparison requires some estimate of how much would have been spent without them. When the Games come, after all, other kinds of tourism go. Indeed, Britain received about 5 percent fewer foreign visitors in August than it did in the same month the previous year.
Those who showed up spent more, sure, but London spent billions of dollars to lure them. And there is some evidence that it works. Countries that host the Olympics experience a significant increase in trade, according to a study by Andrew K.
Rose, an economist at the University of California, Berkeley, and Mark M. Spiegel, an economist at the Federal Reserve Bank of San Francisco.
But their research determined that this was also true of countries that made losing bids for the Olympics — spending tens of millions rather than billions.
The benefit, in other words, came from the signal that a country was open for business, not from the spending itself. The Economics of Hosting the Olympics and the World Cup. In a study of the impact of the Olympics in Sydney, Australian researchers interviewed people in four countries — Hong Kong, Malaysia, South Africa and the United States — one year before and after the Games.
They found little change in perceptions, with one surprising wrinkle: Philip Porter, an economist at the University of South Florida who has studied the impact of sporting events, told me that the evidence was unequivocal.
Still, even for established cities like Boston or San Francisco, there is one clear reason to chase the Olympics or the World Cup: People like hosting major sporting events. Economists tend to pay more attention to money than to happiness, because money is easier to count.
A version of this article appears in print on August 10, , on Page MM14 of the Sunday Magazine with the headline: If You Build It. Tell us what you think.
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Magazine Does Hosting the Olympics Actually Pay Off? Subscribe Now Log In 0 Settings. Close search Site Search Navigation Search NYTimes. Clear this text input. Continue reading the main story Share This Page Continue reading the main story. But they will make its people happy. Binyamin Appelbaum is an economics reporter for The Times. Events Guide Television Theater Video: Events Guide Blogs Multimedia Photography Video NYT Store Times Journeys Subscribe Manage My Account.
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