Economic effects of the World Cup may result in losses, say researchers

The World Cup has an economic effect on countries, according to an analysis of 50 years of nations’ economic data compared with their Cup success over the same time period. UNC Charlotte Professor of Economics Craig Depken collaborated with Dennis Wilson of Western Kentucky University on the working paper entitled “The Long-Run Impacts of the World Cup.” Their paper is on the loss of productivity that happens in a country when a country’s team is in the World Cup.

In countries where football is in high demand, “individuals … might ‘purchase’ their enjoyment of the World Cup with reduced GDP growth in the year the finals take place,” the authors explain.

The co-authors write, “For instance, suppose Brazil advances from the round-robin first round to the second round of play … the single elimination tournament now invites Brazilians to watch other matches in anticipation that one or the other participants might eventually square off against their team. Thus, the further the Brazilian team advances in the tournament the more time is spent watching soccer, by some number of people, and less time is necessarily spent in productive activities.”

What about Brazil this year? If history is any indication, the country will experience a loss in productivity, say the co-authors of the paper. “While individuals watching sports might spend on beer, food, and other services, it is unlikely that they are spending more (in the short run) than they are worth in terms of national production,” they write.

The paper was recently profiled in The Motley Fool.

For more information, download the working paper on the Belk College site or via the Social Science Research Network.