By TIM WHITEHEAD -- CANOE Money
Some complain that the Olympics are too commercial. And they'll be
getting lots of material to back up those complaints in the next few weeks. The
broadcasts of the 2000 Summer Olympics from Sydney will be interrupted
time and again for advertisements. Commentators will occasionally note
how much a gold medal in, say, the men's 100-metre dash will be worth in
endorsements. And, of course, there will be discussions about whether
Sydney will break even or lose money as the host city.
But what about the relationship between a country's medal haul and
the state of its economy? Is there, for example, any connection between the
fact that the United States will probably win the most medals (again)
and the fact that it's the largest economy in the world? Or is there any
reason why India, with more than three times the population of the United
States, got only one bronze medal in the 1996 summer Olympics while the U.S.
received 101 medals overall?
Of course there is. A populous nation might have many potential
world-class athletes, but if many of them grow up in poverty or malnourished, very
few Olympians will emerge. On the other hand, a large prosperous nation
can devote resources to develop athletes and give them the coaching and
the opportunity to train. All other things being equal, a rich country
will beat a poor country in the Olympic medal tally every time.
All other things are not equal, however. Some countries devote more
resources to sports and developing champions than their economic sizes
might suggest. Thus, in the old days of the Soviet bloc, East Germany
and Russia won medals out of all proportion to their economic strength.
Other countries, such as Lebanon or Yugoslavia, don't have the social
stability to allow athletes to develop.
Still, a simple test of the connection between prosperity and Olympic
medal-hauls shows that prosperity explains much. Two measures gross
domestic product and literacy rates explain 75 per cent of the variation
between countries in terms of how many medals their athletes took home from the
1996 summer and 1998 winter Olympics. Roughly stated, the formula says
a country will win 1.08 medals in the summer and winter Olympics
(combined) for every US$100 billion in GDP, and 0.46 medals for every percentage
point that its literacy rate exceeds 60 per cent.
(The literacy rate the percentage of citizens who can read and
write probably captures some hint of the overall wellbeing of the
population. All the numbers, by the way, come from The World Factbook 2000, produced
by the U.S. Central Intelligence Agency, a tremendous on-line resource.
The United States, for example, had a GDP of US$9,255 billion in 1999
and a literacy rate of 97 per cent. The formula says that the U.S. should
have won 100 medals based on its GDP and 17medals based on its high
literacy rate, for a total of 117. In fact, the U.S. won 114 medals.
And Canada? This formula suggests that Canada should have won 25
medals in the last Olympic cycle, and in fact it won 37.
Other countries also outperformed the formula, notably Russia,
Germany, Ethiopia and Australia. Some countries captured significantly fewer
Olympic medals than their GDP and literacy rate would suggest: the U.K. and
Japan stand out as such Olympic underperformers.
Tim Whitehead operates an economic consulting firm, Left Bank
Inc., near Paris, Ontario.
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