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The Beautiful Game and the Dismal Science

June 14, 2010
by Guest author

Today’s post is from Eva Marikova Leeds of the Department of Economics and Business, Moravian College and Michael A. Leeds of the Department of Economics, Temple University.

But is it level?

Every four years, economists around the world turn their attention to something of true interest to the world’s population – predicting who will win the World Cup.

Studies of what it takes to succeed in international football have confirmed that it pays to be big and it pays to be rich.

Countries with large populations and high GDP per capita have higher FIFA rankings and have more success in World Cup competition. 

By that standard, the United States should be an odds-on favorite for this year’s World Cup.  Of the 32 countries currently competing in South Africa, the United States is the most populous and has the highest GDP per capita (after adjusting for purchasing power). 

Obviously, population and income are not the sole determinants of success, as only the most wildly optimistic fans of Team USA expect it to get anywhere near the final round.  In a paper that was published in the August 2009 issue of the Journal of Sports Economics, we confirmed the finding that large, rich nations have greater success in international soccer competitions than small, poor nations. 

But we find that the importance of income and population – and hence the United States’ advantage – fall as they become larger.  More importantly, we also found that a variety of other economic, political, and institutional factors play an important role in a nation’s soccer prowess: 

  • It pays to be a well-to-do democracy.  Even when one controls for GDP per capita, countries that are members of OECD do better than other nations.  More than half of the teams in this year’s World Cup Finals belong to OECD. 
  • Currently communist countries have more success in soccer.  Thus soccer is one of the few venues in which North Korea’s regime has helped its country.
  • The old colonial order continues to hold when it comes to soccer, as the former colonial powers – England, France, Netherlands, Portugal, and Spain (all of which are in this year’s World Cup Finals) – do better than other nations.  
  • Oil-exporting countries do better in international soccer competition.  In this year’s final, that would give an advantage to Mexico and Nigeria.  
  • Perhaps the most important indicator of international success is a nation’s commitment to soccer.  We measured this commitment in two ways.  First, we found that nations that had hosted the World Cup (which 13 finalists have done) did better in international soccer.  Our second measure used the number of teams to reach the quarterfinals of Confederation competitions, such as the UEFA Champions League or the Copa Libertadores.  We found that a country’s national team did better as more of its club teams (which might or might not feature home-grown talent) reached the confederation’s quarterfinals.  This gives a big edge to England and an even bigger edge to Brazil.

What does all this mean for the upcoming World Cup Competition?  We applied our econometric results to data for 31 of the 32 nations competing in the finals (missing data led us to exclude North Korea) and found that the favorite is – surprise of surprises – Brazil. 

It just goes to show that economic analysis sometimes predicts the obvious.

Useful links

The OECD looks at Competition Issues Related to Sports (Yes, that really is the title).

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