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Wednesday, September 13, 2000
Literacy's link to Olympic medals

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 Economics Inc., near Paris, Ontario.
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