Eocnomics Of The OG

Question 1

Paris 2024 is a mega event. What are 3 areas of concern for sports economists?

Answer 1

• Cost overruns
• Economic impacts
• Legacy

Question 2

What can be the sources of cost overruns?

Answer 2

Winners curse - the more bidders, the more chance. Overestimating benefits and underestimating costs

Contractors’ Hold-Up Problem (moral hazard)

Exogenous factors (luck, mismanagement)

Question 3

How could cost overruns be alleviated?

Answer 3

Award event through a lottery

Have IOC choose.

Question 4

Talk about how economic impact can be skewed.

Answer 4

Multiplier can be exaggerated a lot. Normally about 1.5x but estimated often as 2.5x.

Doesn’t account for substitution and crowding out. The idea that other tourists may not come in these Olympic years.

Doesn’t always consider opp. cost of spending and negative externalities.

Question 5

What does Firgo (2021) look at?

Answer 5

Looks at impact of OG on host region GDP per capita

Question 6

Talk about the Firgo (2021) study. Treatment, methodology, mechanism.

Answer 6

Treatment is the region hosting games, control are runners up in bid.

Mechanism: increase in spending should increase output and incomes. (Although a lot of employment is short term and voluntary)

Uses a dynamic difference in difference model to look at impact of olympics on ratio of regional GDP/capital over national GDP/capita

Question 7

Firgo (2021) findings:

Answer 7

Significant positive effect on regional GDP per capita in year of and year before games.

Down the line there are some more positive effects which are less precise

No effect for winter games

Question 8

What are the legacy effects? Why are they being promoted by IOC?

Answer 8

Less concerned with direct effects but instead the impact of having better facilities and getting more sport participation (mixed evidence)

Feel good factor?