Friday, June 18, 2010

Economics and World Soccer Cup

It is a global event every four years, because it gather 32 soccer teams which represent 84% of world GDP, to compete for the privilege of being the Champion. S. Campanario in his book “The Economics of the Unexpected”.(In Spanish La Economia de lo insólito 2009),analyzes the economic impact of such event . Given the fact that a lot of soccer fans leave aside some of their obligation while each game goes on, the first impact come from inside the firm, due to lower short run productivity, although its effect on GDP depends of the magnitude of such out of labour flow, on the fundamentals. As long as the favourite team move forward, the expectations goes higher and more fans join in for the extraordinary spectacle of sport at its best, making the productivity losses more significant at the aggregate level.
However, is it that these short run productivity losses, stay on for longer period of time?. It should not be so. The economics reasoning for fans goes as follows. The marginal benefit of watching each game ,is higher than its cost. Assuming that nobody will risk voluntarily their job because of these matches , the cost is basically the opportunity cost of those activity postponed because of world cup matches .Thus, although firms might get some short run losses, they can get them back , as long as fans goes back to work with higher motivation specially whether their team wins . Watching the game is like a complement to daily routine, which replace other activities such as read the newspaper , talking at the cafeteria, checking internet, and the like This is known as “soccernomics”, which analyze the whole variety of issues concerning soccer. For example, the correlation between team performance and fans attendances which it does not depend on the ticket price for each match. Those teams with higher performance expectations, have more income volatility, than those with more modest performance expectations. Therefore , there is an expectation – gap, which might turn out to be more critical for income purposes ,in those economically stronger teams.
The net economic impact at the aggregate level of world cup ,should be positive. Besides, each country which participates in the event , should also recover any short run productivity losses because of fans involvement .
How come?. These days ,internet make the difference .It allows the chance of being there , without depending exclusively of TV transmission. It also allow , to focus on the most important events of each matches ,all of which reduces the average time devoted to the games. The positive impact arising from it ,compensates the negative side of distraction from main task .In other words, let welcome this fantastic show of natural skills, and let us enjoy it at its best. Which teams goes to the final?: ¡Latin America have a very good chance of get it all! .-