Posted by: olymponomics | January 23, 2012

Known unknowns…

London Olympics 2012: will Games bring boom time or financial bloodbath?

Another of the usual sensationalist headlines about the risks of London 2012 raises the question of whether it is possible to forecast the knock-on effects of the event for other areas on national life, such as in relation to pressure on public transport in the capital, workforce absenteeism, consumer spending and demand for other leisure and entertainment industries both inside and outside London. While there are complex modelling technologies and toolkits out there to help with this question, one of the inherent difficulties to such forecasting is the assumptions that are required about behaviour (so to predict the consequences of the Olympics on demand for theatre-going we would need to have informed priors about the elasticity of individuals’ demand for the theatre as compared with attendance of Olympic events or watching it on TV, alongside other additional factors such as their preference for avoiding central London during the peak of the event – along with information about a host of other factors). Therefore, while many people may offer predictions in advance of the event about how routine business will be affected by the Games, one of the main unknowns is our own behavioural response to it!

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