Going for the Gold: The Economics of the Olympics

Victor Matheson and Robert Baade ()
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Robert Baade: Department of Economics and Business, Lake Forest College

No 1605, Working Papers from College of the Holy Cross, Department of Economics

Abstract: In this paper, we explore the costs and benefits of hosting the Olympic Games. On the cost side, there are three major categories: general infrastructure such as transportation and housing to accommodate athletes and fans; specific sports infrastructure required for competition venues; and operational costs, including general administration as well as the opening and closing ceremony and security. Three major categories of benefits also exist: the short-run benefits of tourist spending during the Games; the long-run benefits or the "Olympic legacy" which might include improvements in infrastructure and increased trade, foreign investment, or tourism after the Games; and intangible benefits such as the "feel-good effect" or civic pride. Each of these costs and benefits will be addressed in turn, but the overwhelming conclusion is that in most cases the Olympics are a money-losing proposition for host cities; they result in positive net benefits only under very specific and unusual circumstances. Furthermore, the cost-benefit proposition is worse for cities in developing countries than for those in the industrialized world. In closing, we discuss why what looks like an increasingly poor investment decision on the part of cities still receives significant bidding interest and whether changes in the bidding process of the International Olympic Committee (IOC) will improve outcomes for potential hosts.

Keywords: sports; public finance; economic impact; New Orleans; Hurricane Katrina (search for similar items in EconPapers)
JEL-codes: L83 Z23 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2016-02
New Economics Papers: this item is included in nep-cul and nep-spo
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Citations: View citations in EconPapers (50)

Published in Journal of Economic Perspectives, Vol. 30:2, Spring 2016, pp. 201-218.

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https://hcapps.holycross.edu/hcs/RePEc/hcx/HC1605-Matheson-Baade_Olympics.pdf (application/pdf)

Related works:
Journal Article: Going for the Gold: The Economics of the Olympics (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:hcx:wpaper:1605

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