Economics and the Summer Olympics

Abstract

Applying stochastic frontier analysis, we estimate distance to frontier of countries in the production of success at the Summer Olympic Games since the 1950s. Our measures of success are medal shares and a broader concept including Olympic diplomas. Following Bernard and Busse (2004), population and GDP are used as inputs. Although the impact of GDP is always positive, we show that the sign of the population effect depends on wealth and population size of a country. The results show that the spread of distance to frontier is very wide over time, across countries, gender, and sports: not only resource endowment matters but also utilization of resources. These differences can be seen as caused by differences in financial support, training methods, organization, or culture. Using a method proposed by Battese and Coelli (1995), the authors build on well-documented results in the literature and identify the channels through which planned economies and host countries generate Olympic success. The method allows shedding light on aspects of recent history, such as the consequences of the breakdown of the former Soviet Union.