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Olympic predictions

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Price Waterhouse Cooper analyzed countries’ performances in the Olympic and concluded in June 2012, well before the Olympics started:

The following economic and political factors were found to be statistically significant in explaining the number of medals won by each country at previous Olympic Games:

  • population;
  • average income levels (measured by GDP per capita at PPP exchange rates);
  • whether the country was previously part of the former Soviet/communist bloc (including Cuba and China); and
  • whether the country is the host nation.

[T]he two countries with by far the largest populations in the world are China and India, but their past Olympic performances could be not be more different: China is very strong as noted above, while India won only 3 medals in Beijing (though this was an improvement on just one medal in both Athens and Sydney); our model can explain some of this divergence, but still suggests that India is a significant underperformer, with a model target of around 5-6 medals for London.

Bang on the nose! It could have been analyses such as this which led the now-controversial pundit, Fareed Zakaria, to blog for CNN:

Countries with large populations tend to do well. Logic suggests that the more people you have, the more likely you are to have a few excellent athletes.

But a country like India contradicts this theory. It is the second-most populous country in the world, and yet it has won only two gold medals between 1960 and 2000. Now, there may be specific reasons for India’s lackluster performance, but mostly, you can put this down to wealth – despite its rapid growth, India has a very low per capita GDP.

One of the most insightful analyses that I have seen was by Tyler Cowen and Kevin Grier in Grantland:

While China has grown faster and is richer than India, the difference in wealth can’t begin to account for the chasm between their Olympic results.

In their book Poor Economics, MIT economists Abhijit V. Banerjee and Esther Duflo attribute India’s dismal Olympic performance at least partly to very poor child nutrition. They document that rates of severe child malnutrition are much higher in India than in sub-Saharan Africa, even though most of sub-Saharan Africa is significantly poorer than India.

Even the significant segment of the Indian population that grows up healthy is at a disadvantage relative to China. The Chinese economic development model has focused on investment in infrastructure; things like massive airports, high-speed rail, hundreds of dams, and, yes, stadiums, world-class swimming pools, and high-tech athletic equipment. And while India is a boisterous democracy, China continues to be ruled by a Communist party, which still remembers the old Cold War days when athletic performance was a strong symbol of a country’s geopolitical clout.

Another country that has been doing poorly relative to its global stature is Japan. Two papers that used income and population (along with some other factors) predicted that Japan’s medal total in 2008 should be roughly the same as in 2004, but of course it wasn’t: Japan won 37 medals in 2004 and only 25 in 2008. A lot of the problem is Japan’s rapidly aging population. Since 1970, the percentage of Japan’s population that is over 65 has more than tripled, from 7 percent to 23 percent (the corresponding number in the U.S. is around 12 percent), and by 2060 this number is expected to reach 40 percent.

Superb, because it simultaneously explains another puzzling statistic: that Japan has the second best performance in controlling unemployment among the developed countries, after industrial powerhouse Germany. How does a stagnant Japan manage to do this? Seems like the demographics is playing a major role in depressing Japan’s economy.

Cowen and Grier extrapolate a demographic trend to produce this prediction:

China will level off and then decline as a medal powerhouse. In less than 15 years, the typical person living in China is likely to be older on average than the typical person living in the United States, in part due to the country’s one-child policy. As of 2009 the number of over-60s was 167 million, about an eighth of the population, but by 2050 it is expected to reach 480 million people older than 60, with the number of young Chinese falling. The country will become old before it is truly wealthy.


Written by Arhopala Bazaloides

August 13, 2012 at 12:17 pm

One Response

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  1. […] in the words of Price-Waterhouse-Cooper’s sports analysts, India is “a significant underperformer”, then the blame is almost certainly on sports […]

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