Paul Maidment

Paul Maidment, None

8/24/2008 @ 4:00PM

Gold Medal Economics

The 302nd and final gold medal of the Beijing Olympics has been won, with France beating Iceland in the men’s handball final.

Neither hosts China nor the U.S. could add to their gold tally in their final finals, with the U.S. losing to Hungary in water polo and Zhang Zhilei losing to Italy’s Roberto Cammarelle in boxing’s super-heavyweight division.

By that point China’s lead in the gold medal count was unassailable, and its barely hidden agenda of topping the United States for the first time handily achieved. The final tally: China 51; U.S. 36.

In the overall medal count, though, the order was reversed: U.S. 110; China 100. Both nations could claim to be No. 1 in a contest in which there was more at stake than just bragging rights over which country’s athletic prowess is faster, stronger, higher.

Few economists would have been surprised that China is gaining ground on the gold medal tally. While it is difficult to predict the outcome of individual events, the overall number of medals a country will win can be closely forecast.

Regression analyses carried out on all the summer and winter Olympics since the end of World War II show that there are two important variables: a country’s total population and its per capita income. Also important are whether a country has an authoritarian government, a country’s climate and whether a country is the host country for a particular Olympics.

The first two variables are particularly significant for predicting golds.

China has a much bigger, if slower growing, population than the U.S., but its per capita income has been growing much faster over the past 12 years, so it would be expected to be winning an increasing number of medals. Its big jump in golds this year, from 32 at the Athens Olympics, where the U.S. won 36, can be explained by variables three and five.

Five, being the host country, is self-evident and particular to these games, but the impact of three, an authoritarian government, was intensified by “Project 119″–the 119 being the number of events at the Beijing games that state sports planners pegged as having medal potential for Chinese athletes.

Since the Sydney Olympics in 2000, China has devoted considerable resources and energies to finding young promising athletes, and providing systematic training and equipment in centralized facilities.

In contrast, the U.S. is the only participating country that does not provide direct government funding for its athletes. In recent games the U.S. medal count has remained static, at around 100 (a low 91 in 2000 and a high 110 in 2008, ignoring the boycott years). Yet as Stefan Szymanski, associate dean at London’s Cass Business School and author of papers on the economic correlations of medal tallies, notes: Such stasis conceals a relative decline.

In 1976, the USA took 15% of the medals on offer, but only 11% in 2008 (going back even further, USA won 17% in 1952). Part of this reflects the U.S.’s declining share of world population, says Szymanski, but mostly it constitutes “economic catch up” by the rest of the world.

There is a globalization effect here, too. More nations are winning medals than before: 81 in 2008 compared to 37 in 1976. That holds true, he reckons, allowing for a net 17 increase in the number of nations competing following the breakup of the Soviet Union, Yugoslavia, Czechoslovakia, the admission of China, readmission of South Africa and the reunification of Germany.

Szymanski also says he expects “a big drop in China’s medal count at the next games” in London. Greece, host of the 2004 games, bagged only four medals in Beijing vs. 26 in Athens. A similar drop-off happened to Australia, the U.S., Spain and South Korea in the games following the one they hosted.

Whatever London brings, for now China is basking in the glory of Beijing. One sidelight on what national pride was at stake: The official games site and China’s state CCTV lists the medal rankings by golds, while most of the American press ranked the nations by overall medals, in which the U.S. had a lead throughout the two weeks of competition.

That has provided much grist for the bloggers’ mill, as has how American broadcasters have been concentrating on the events Americans care about and in which their athletes do well–swimming, track and field, basketball, women’s soccer–while ignoring those Chinese are interested in and in which their athletes do well–table tennis, diving, shooting, women’s weightlifting–and vice versa.

That misses a point about the sports each nation excels in. Americans do well in Olympic sports where the competitors are professional or near-professional athletes, sports such as basketball, track and field and swimming, and where there are deep-pocketed college programs to support them. Chinese athletes do well in those where competitors mostly scrape by as amateurs or with the support of cash-strapped national sports associations.

While the money, organization and level of government support thrown at every aspect of the Beijing games has been unprecedented, Project 119 threw the full state apparatus behind training elite athletes in those non-professional sports. In that respect, it has taken over the role that the Army and other state intuitions played in Soviet countries in the Cold War days, when a different East competed with the West for Olympic supremacy.

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