THE ECONOMICS OF THE OLYMPICS

The United States government spent roughly $139 million to promote sports in 2008 and won a total of 110 medals, 35 of which were gold. THat is a whopping $1.18 million per medal and $3.16 million per gold medal. China spent even more money (approximately $250 million) and won more gold(51) but fewer total medals (100), operating at a much more inefficent rate. The country paid $4.9 million per gold medal and $2.5 million per medal overall. This back of the envelope calculation - the funding also benefited other sports and cannot be attributed completely to the Olympics- demonstrates that moeny can buy you medals, but there are other factors involved that can boost efficiency and save costs. The Goldman Sachs Economics team ran an econometric analysis comparing the medal counts with GDP growth, the political and institutional environment, and they found that "the trend with a few economically significant countries winning a bulk of the Olympic medals on offer - has continue in recent times. More than 50 percent of the medals at the Bejing Olympics were won by less than 10 countries. The report also corroborated the thesis that just throwing money at sports is relatively inefficient. There is a positive and significant association from being a developed economy, suggesting that there is something additional in the institutional and structural environment of developed countries that boosts medal attainment above and beyond the pure income effect. In a more detailed econometric analysis, looking at individual factors such as political stability and technology, the study found that a one-point increase in political stability yields an extra 2.6 medals for the country. Despite the fact that emerging countries have taken a higher share of medals won their share of cycling medals is still where it was in the 1950s at a level below 20%, In a regression analysis against the variables of GDP per capita, income relative to the United States democracy and the host factor, sports such as fencing and canoeing show a high correlation. Other less equipment intensive sports such as soccer, softball and triathlon who a lower correlation.