Monday, 13 August 2012

New Zealand's Olympic success - what's in it for us?

Well, the Olympics were again a wonderful source of entertainment and drama - they were compulsory viewing in our household. For a spectacle, you really can't beat an Olympic Games. Mind you, for US$14 billion, it had to be just that!

Not surprisingly, much of our attention now turns to the implications of the performances of New Zealand's Olympians for us here at home. They have given us much to celebrate, and I am sure that as a country, we are all very proud of their achievements. In the headlines this morning - what will the Government do as far as funding high performance sport in this country to see us do even better in 2016? The answer: No change for two years, but come election year, who knows?
Sports funding would again be looked at for the 2014 Budget when McCully said he hoped Finance Minister Bill English would be "in a generous frame of mind".
It is not like the Government is being scrooge with this. In fairness, funding was increased from NZ$40m to NZ$60m in 2010.

Mr McCully pointed out that rowing was an excellent example of targeted government spending producing medals in London. Sport New Zealand targets six sports: rowing, cycling, triathlon, sailing, swimming and track and field. It would be fair, on the surface, to say that these targets largely delivered results. The question, for me, is whether success in other areas would be even better if government funding was extended to other promising sports? There is no easy answer to this one, but plenty of opinions from influential former Olympians as can be viewed in this New Zealand Herald story, as well as at least one academic:
Canterbury University senior business lecturer Ekant Veer said the Government needed to put more money into Olympic funding and not concentrate on the top medal prospects.
"Funding only sure medallists not only sends the impression that we don’t support effort, but it also can kill a future generation of athletes who are inspired to step up and be the next gold medallist."
I absolutely agree. I only wish I knew what a sure medalist was, and how to predict one.

What perked my ears, though, was this comment:
Veer said New Zealand was a sports crazy country and a successful Olympic campaign often had huge impact on the nation’s mood.
"Which, in turn, can lead to increased productivity at work, improved relationships, increased consumer spending and all manner of behaviours that are positive for this nation."

Granted, we are a sports crazy nation. We do love our sports. Most countries would also profess to being at least as sports-mad as we are, though. I'm not aware of much in the way of evidence that supports the economic arguments mentioned above (increased productivity at work and increased consumer spending). A really interesting piece of research on the link between sporting success and happiness from Europe by Kavetsos and Szymanski that is sure to be doing the rounds at the moment (RePEc working paper link here, published version link here) finds that while hosting events produces a definite (and measurable) feelgood factor, the link between national sporting success and happiness was not significant. If evidence from Europe is anything to go by, we loved the Rugby World Cup last year for a reason, but we shouldn't expect a lot more than short-term happiness from our Olympic success that fades almost as quickly as it arrived.

The All Blacks play this weekend...


  1. Isn't anyone going to ask what the opportunity cost of sport funding is? What would happen if we put the money used for sport into health or education or welfare or ........? Or what if we just gave it back to the taxpayer, wouldn't that make the taxpayer happy?

  2. I agree wholeheartedly, Paul. The benefits of taxpayer funding (of all description) should, in an ideal world, exceed its opportunity cost. If it doesn't, then it should be redirected elsewhere. The same thing can be said for government funding of sports facilities. You could be forgiven for thinking that there was no opportunity cost, the way some people talk about it...

  3. We may yet here run a macro honours project using Ekant's hypothesis: see whether Olympic medal counts affect Solow residuals.

    I'd be very surprised if anything turned up.

    1. Great idea!

      I remember this from my literature review:

      Berument and Yucel (2005) theorised that the success of the local football team improved job performance and productivity. Results from the research showed football success positively and significantly affected the growth of industrial production (Berument and Yucel, 2005). On the other hand, Thoursie (2004) found evidence to suggest that productivity could possibly have declined due to sporting events as more people reported sick to watch events. The increase in Swedish male employees reporting sick was 6.6 percent during the Calgary Winter Olympics, whereas the rate of absenteeism for females actually declined.