At Friday’s Olympics Opening Ceremony, athletes from 204 countries will parade around London’s Olympic Stadium. Billions of people around the world will then watch the games until they end on 12 August.
Economics cannot predict how many gold medals Usain Bolt or Michael Phelps will win. However, a range of economic models have proved remarkably successful at predicting a given country’s total medal count and gold medal count.
In particular, Daniel Johnson, a Professor of Economics at Colorado College in the US, has made a lot of waves since his first Olympic medals forecast for the Sydney games in 2000. One look at his record explains why. Over the past five Olympics, from Sydney through to the 2008 Summer Games in Beijing, Prof. Johnson’s model demonstrated an amazing 94 per cent accuracy between predicted and actual national medal counts. For gold medal wins, the correlation is 87 per cent.
In Johnson’s own words, “it’s just pure economics”. He’s also been quoted as saying, “I know nothing about the athletes. And, even if I did, I didn’t include it.” Interestingly, although Johnson’s PhD is from Yale University, his current university is located close to the headquarters of the US Olympic Committee.
Johnson’s forecast model is based on a statistical relationship between Olympic medals and a range of factors with over 60 years of data built into the model:
(i) per-capita income (the economic output per person);
(ii) a country’s population;
(iii) its political structure (how democratic it is, for example);
(iv) its climate (cold-climate countries, such as Ireland, have an advantage this time around);
(v) the home-nation advantage for hosting the games or living nearby (again, that should benefit Ireland).
So, who will top the table for London 2012? Johnson and his researchers have published their forecasts (http://faculty1.coloradocollege.edu/~djohnson/Olympics/Olympics2012TablesOnly.pdf) and are predicting 34 gold medals for the US, 33 for China, 25 for Russia, 20 for Britain and 19 for Germany.
One issue that might skew the forecasts is any ‘host nation effect’. That was evident in China’s table topping performance in Beijing. In 2008, Britain won 47 medals, including 19 golds.
As reported in the Guardian last week, economists have forecasted between 20 and 30 British gold medals this time around. Although Prof. Johnson has suggested that the effect for the home country is three more medals (one being gold) than its athletes would otherwise win, his forecast of 20 golds for Britain is on the lower end of expectations.
Economists at Goldman Sachs have also come up with a forecasting model. In their ‘The Olympics and Economics 2012’ report, Goldman are very optimistic about Britain, predicting a third place finish in the medals table, with 65 medals, including 30 golds, putting them ahead of Russia with 25 golds.
And what about Ireland? According to Prof. Johnson, Ireland should win four Olympic medals, including a gold. So, let’s hope he’s right and that we hear ‘Amhrán na bhFiann’ being played in London.