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Going for gold!

12 August 2016|

A sideways look at economics

What determines a country’s success at the Olympics? Demographics must play a part. The laws of probability tell us that people with the potential to be the best in the world, in any field of human endeavour, are more likely to be found in big countries than in small countries. But, from a selector’s perspective, knowing that you have the natural talent is one thing – finding it, and nurturing it is something else entirely. That is why a country’s degree of economic development, reflected in its GDP per capita, should matter too.

Back in 1984, China picked up just 32 of the 688 medals available at the Los Angeles Olympics. Even though China’s selectors had access to more than 20% of the world’s population, China’s team came home with less than 5% of the medals on offer. The US, with less than 5% of the world’s population, won a staggering 174 medals. Home advantage must have played a part. The absence of the Soviet Union, whose athletes stayed at home, was probably significant too. But much of the difference between the performances of the two squads will have reflected relative resources. Back in 1984, US GDP per capita was around $30,000 in today’s prices. Measured on the same basis, China’s GDP per capita was less than $500.

We have attempted to account for the performance, through time, of 13 different countries at successive Olympics. We assume that the share of medals awarded to a particular country depends on its population, and on its GDP per capita, relative to the average. Both explanatory variables are statistically significant, with population arguably the more important of the two. If you were to double a country’s population, the increase in medals won would be ten times larger than if you were to double its GDP per capita. But our model is far from complete. Relative population and relative GDP per capita together account for just 10% of the variation in a country’s medal share.

For Mr B - Mean over(+)under(-) performance 1996-2012

Our chart shows the average residual from our model for each of the 13 countries over the period from 1996 to 2012. Russia, the US and China have not just outperformed the model on average, they are the only countries that have outperformed at every single Olympics in our sample. What might account for this outperformance? “Drugs!” is one answer. Alternatively, it might just be that these three ‘Superpowers’ possess an intense desire to win, over and above what one would imagine given the resources available to them. Russia, the US and China have put more into winning medals than one might expect in a country at that stage of economic development.

At the time of writing, China has won 30 medals at the 2016 Olympics. Will it catch the US, currently at the top of the table, with 38 medals? If it does, it will have very little to do with economic development. Even if we take China’s GDP statistics at face value – which we do not – the extent to which China’s economy has outperformed that of the US since the 2012 Olympics is nowhere near enough to close the deficit.

Thank Fathom it's Friday

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