Tag: sports

The Olympics and Economics

There’s something inexplicably uplifting about sporting success. Not only does it inspire — even if fleetingly — at an individual level, it fosters national pride, a feeling rarely experienced in our networked world of partisan sniping. India’s best-ever performance at the Tokyo Olympics gave me, you, and millions of other Indians a reason to chin up in these challenging times.

https://publicpolicy.substack.com/p/139-a-question-of-sports?

So begins Pranay’s essay today from his (and RSJ’s) excellent newsletter, Anticipating the Unanticipated. The essay is a rumination on the role of government in sports, and as Pranay rightly points out, the implicit assumption that most of us make is that government should play a bigger role in fostering an environment more conducive to sporting excellence.

“Fostering an environment more conducive to sporting excellence” ought to at least get me an interview with a consulting firm, so I’ll translate that into plainspeak. The government should spend more, and work more on building out better sporting facilities, hiring better coaches, paying our sportspeople more, and more besides – all so that we win more medals.

Pranays disagrees with this view (and I agree with Pranay). This job, he says, is best left to markets and society.

Consider the role of markets first. Not too long ago, cricket would be criticised by players of other sports for hogging all the popularity, attention, and resources. And then a commercial, entertainment-focused enterprise such as the IPL turned this argument on its head. The city-based league format pioneered in India though IPL proved to be a positive-sum game for other sports. It spawned similar leagues in several sports, even managing to bring back Kabbadi to primetime TV screens. This commercial model energised many sports in ways that no government medals could have done.
At the amateur level, reforms in India’s FDI policy finally brought world-class sporting retailers such as Decathlon to India. Earlier, the sports retailing scene was stagnant, with few old-style shops only catering to demands of select, mass-market sports. By getting out of the way, the government helped change the sports equipment landscape for millions of budding sportspersons in the country. In short, markets are critical to lasting sporting success.

https://publicpolicy.substack.com/p/139-a-question-of-sports?

I agree, for the most part, but with government support, about which I’ll write more in a bit. Pranay also makes the case for the third pillar to do its bit:

Take the role that the MRF Pace Foundation has played in producing fast bowlers in India. Or the contribution of the Tata Group in improving hockey facilities in Odisha. We need many more philanthropic initiatives of this nature.
Besides the well-established corporates, there are smaller non-profit organisations such as the GoSports Foundation and Olympic Gold Quest. These organisations sponsor and support talented Indian sportspersons so that they can become world-class. Perhaps, we need hundreds of such societal initiatives outside the government to achieve sporting excellence.

https://publicpolicy.substack.com/p/139-a-question-of-sports?

By the way, here’s a good (and fairly straightforward) paper to read on this issue:

Every four years it begins anew, the hand-wringing and finger-pointing over a poor showing at the Olympics. The only real uncertainty is which countries will feel the sharpest disappointment over their poor performances. After the
Barcelona Olympics, a headline in the New York Times read “Despite its 108 medals, U.S. rates mixed success.” In 1996, headlines in London trumpeted “Olympic shame over Britain’s medal tally” and “Britain in danger of being left at the starting line,” while in Mexico, Japan, Singapore, Colombia and Egypt, medal totals below expectations led to national self-examinations. After Sydney, in Canada the Globe and Mail bemoaned “Canada’s Olympic fears come true: Despite a few bright spots, athletes not only won fewer medals, they performed below their own and nation’s expectations.” In this paper, we ask the straightforward question of how many medals countries should be expected to win by considering what factors influence national Olympic success

https://www.nber.org/system/files/working_papers/w7998/w7998.pdf

Read the whole paper, of course, but here’s a key bit:

Over time, a country’s real GDP remains the single best predictor of Olympic performance. Population and per capita GDP contribute equally at the margin implying that two countries with identical levels of GDP but different populations and per capita GDP levels will win the same number of medals. While GDP is most of the story, it is not the whole story. Host countries typically win an additional 1.8 percent of the medals beyond what would be predicted by their GDP alone. The forced mobilization of resources by governments clearly can also play a role in medal totals. On average, the
Soviet Union and Eastern Bloc countries won a share of medals higher by 3+ percentage points than predicted by their GDP

https://www.nber.org/system/files/working_papers/w7998/w7998.pdf

As Pranay mentions in his newsletter, sure you could sponsor projects of national pride, but the opportunity costs are far too high.((He doesn’t put it like that, the phrasing is mine)).

But ultimately, economic well-being is a good predictor of doing well in the Olympics. So what can (and more importantly, should) a government do about increasing the tally of medals at the Olympics?

As with much else in life, just one thing:

  1. Grow the economy as rapidly as possible

… but that being said, help (state, markets or communities – or all three) is needed. This video, via MR (and remember, this is the USA), shows how difficult the economics of being an Olympian are:

If you can afford to help out, please do! 🙂

How Far Away Are We?

A Glorious Mishmash…

… of art, sports, culture, movies, globalization. Via splainer.in

ROW: Links for 17th July, 2019

  1. “A politically divisive debate continues to rage over U.S. President Donald Trump’s push to add a citizenship or nationality question to the U.S. census.That same question has been part of Canada’s long-form census for over a century without a ripple, although it’s not part of the short-form questionnaire.”
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    Via MR, an article that helps you learn that the citizenship question has been around for a while now.
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  2. “Not asking about citizenship seems to signify an attitude toward immigrants something like this: Get them in and across the border, their status may be mixed and their existence may be furtive, and let’s not talk too openly about what is going on, and later we will try to get all of them citizenship. Given the current disagreement between the two parties on immigration questions, that may well be the only way of getting more immigrants into the U.S., which I hold to be a desirable goal. But that is a dangerous choice of political turf, and it may not help the pro-immigration cause in the longer run.”
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    And here’s why Tyler Cowen linked to the piece we added above in the first place.
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  3. “The Indian Rupee will now be accepted for transaction at all airports in Dubai, according to a leading newspaper in the United Arab Emirates.The acceptance of Indian currency is good news for tourists from that country as earlier they lost a sizeable amount due to exchange rates, sources said.”
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    On the growing importance of India in the global scheme of things…
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  4. “By demanding that schools provide opportunities for young girls to play sports and mandating that universities provide equal scholarship funding for women, title IX created opportunity and incentive for girls to play sports. Suddenly, not only were energetic, athletic girls given the same opportunities to play as the boys were, but they also had the opportunity for their sporting talent to fund their educations through scholarships.”
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    Policies, politics, Title IX and the recently concluded World Cup.
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  5. “Yan said the data shows that housing prices have “decoupled” from income, and are instead driven by access to capital – giving investors a clear advantage over average Canadians. “It’s not about supply or demand any more,” said Yan. “It’s: who are we building for?””
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    Circling back to Canada, this time about housing and its excesses. This has a familiar ring to it…

Links for 25th March, 2019

  1. “The researchers discovered that commonly visited places, like coffee shops, can be within a few feet of each other but they can each primarily have visitors from completely different income brackets. This indicates that economic inequality isn’t just present at the neighborhood level, but it can also show up among the places people visit as part of their daily routines. It suggests that income inequality might impact not just where people live, but also where they go. ”
    A great article to help you think through the following: inequality, how to measure it, how to measure it using modern methods, what is the difference between class inequality and income inequality, sampling, the limitations of sampling, the Data For Good initiative, 100 Resilient Cities and the SmartCitiesDive program.
  2. “An experiment that the researchers arranged hinted at a possible explanation of the correlation they found. They asked participants to picture and describe what it would be like to have a certain amount of daily free time, and then report how they’d feel about that allotment. “What we find is that having too little time makes people feel stressed, and maybe that’s obvious,” says Holmes. “But interestingly, that effect goes away—the role of stress goes away—once you approach the optimal point.” After that point, Holmes says, the subjects started to say they felt less productive overall, which could explain why having a lot of free time can feel like having too much free time.”
    One of my favorite Calvin and Hobbes strips has the quote “there never is enough time to do all the nothing you want to”, or words to that effect. This article tells you that having more than 2.5 hours of “nothing” time may well be too much.
  3. “While India has 70-odd companies that are rated highest quality, only two companies in the US enjoy this distinction. No company in Germany and UK enjoys AAA rating. Among emerging countries, China has only 14 AAA-rated entities. This implies a gulf between credit standards in India and elsewhere. The exacting standards observed in other countries are missing among domestic agencies.”
    Via Gulzar Natarajan, this article points out a disturbing statistic – Indian firms might well be given ratings that don’t really indicate their reliability. Rating agencies the world over took a hit to their reputation post the 2008 crisis, but this story seems to be unique to India. The article does have some caveats, but I’d say the news is, even so, worrying.
  4. “We employ Comin et al.’s (2010) data on ancient and early modern levels of technology adoption in a spatial econometric analysis. Historical levels of technology adoption in a (present-day) country are related to its lagged level as well as those of its neighbors. We allow the spatial effects to differ depending on whether they diffuse East-West or North-South. Consistent with the continental orientation hypothesis, East-West spatial effects are generally positive and stronger than those running North-South.”
    Are you familiar with vertical vs horizontal business models? Apple is vertical (controls everything, end-to-end) and Netflix is horizontal (needs to be available across multiple verticals to succeed). I was strongly reminded of that when I read this.
  5. “He is maddening in ways they never anticipated, along vectors they’ve never seen; he is a tireless innovator in the craft of mass irritation. He can cause fans to go absolutely nuts whether he wins or loses. McEnroe himself has spent a good chunk of the past five years complaining about Kyrgios, and McEnroe is probably the greatest tennis player of all time at driving people wild. Being found intensely annoying by John McEnroe is a high honor for any exasperating person. It’s like Beethoven humming your melody.”
    In which Brian Philips makes the case for the upside to Kyrgios being, well, Kyrgios. The interesting question is where else might such a contrarian philosophy work, and why?

Links for 18th February, 2019

  1. “That’s a tenet of progressivism: that progress is inevitable. So if you get something designated as progress, then your party, which was responsible for it, will get the credit for it, will always get to attack the other party for opposing it, and will find a continual source of votes in future elections by defending it. And that assumes that people will passively accept this narrowing of the range of political controversy and enjoy the individual relationship that each person has with this huge government that sends checks in the mail.”
    A rather old interview (from 2012), but the article I linked to yesterday about dole outs in India induced some additional research that helped me land up on this article – and it makes some interesting points, none of which is more interesting than the one quoted above.
  2. “The case of these surviving princes in our socialist republic is, in some ways, reflective of the countless ironies that make up Indian democracy. India remains, in many ways, a marriage of awkward histories and feudal legacies with the idealism of liberal thought and constitutional values. They do not sit easily with each other always, and sometimes jostle with force to make their presence felt. And yet the enterprise moves forward, one way or another: which perhaps explains why, even as we celebrate a Dalit president, newspapers descend into a frenzy at the advent of babies to freshly adopted maharajas; how even as a “chaiwallah” rises against the odds to become prime minister, there are princes and rajas to whom his government still owes a royal pension.”
    Manu S. Pillai on the wonder that is India today – its many contradictions and confusions. This one happens to be about how we still pay out pensions to princes and zamorins.
  3. “In short, what happened since September 2018 was the trifecta of trade tariffs, inadequate fiscal firepower from the Ministry of Finance (MoF), and a consistently hawkish PBOC. The 10% tariff on $250 billion of Chinese exports weakened domestic demand more than fiscal support was able to offset, which was reflected in both slower growth and lower inflation. And as inflation fell, the PBOC chose not to adjust the nominal interest rate, so the real interest rate effectively rose as a result. This confluence of factors put significant downward pressure on economic growth.”
    The article contains some forecasts as well – make what you will of them. But the analysis of why China did not use either fiscal or monetary tools is worth reading.
  4. “One story I’ve found myself revisiting over and over again is Asimov’s ‘Franchise,’ published as a short story in the August 1955 edition of If magazine. In it, a future America (2008), decides to reduce voting to a statistical model that extrapolates the outcomes of all elections based on a set of questions answered by one, extremely representative person.”
    The Verge has put together a list of books you might want to read to understand AI better. I am delighted to say that I haven’t read a single one of these, and therefore have a lot of reading to do.
  5. “The supporters are known as ‘Umans’ and control the team using the free United Managers’ app – a start-up which began working with the club in 2017.Before the game Umans can decide on the starting line-up, substitutes, the formation, set-pieces and communicate with staff and players.They vote using coins that they receive by using the app, or they can purchase a premium subscription. The more a Uman plays the game, the more weight their vote is worth.”
    What a fascinating experiment. A football club that is run, on the fly, by the fans. With the advent of technology, what else might be run this way in the future? With what consequences?