Posted by: olymponomics | May 19, 2012

The contested benefits of mega-events

There is tremendous debate over the winners and losers from hosting mega-events such as the Olympics. It is notable that distributive effects of such events have been subject to little systematic examination. There is mixed evidence of the contribution of these sorts of major events to social welfare, through either economic impacts or societal well-being. In Chapter 5 of Olympic Risks I chart the increasing use of economic impact assessments as a means of political justification for hosting the Olympic Games since the the late 1970s, in particular linked to the growing costs of the event. A recent article in the British Medical Journal highlighted the limited evidence base for claims that such events have positive impacts (not least when opportunity costs and displacement effects are not accounted for). Through a review of impact studies of major multi-sports events, its authors conclude “…There is little evidence that major multi-sport events held between 1978 and 2008 delivered health or socioeconomic benefits for the population of the host country.” Further, they suggest that the findings of evaluative studies are vulnerable to selection bias, in the possibility that “…the commissioning of studies and their publication could well be biased towards positive results”. It is notable that the majority of economic impact assessments of the Olympics are ex ante, i.e. models constructed on the basis of certain assumptions about spending and investment multipliers, and are rarely tested after the event. This disconnect between evidence and event justifications echoes similar findings of the over-optimism of cost-benefit analyses undertaken for large scale construction and infrastructure projects, as demonstrated in Flyvbjerg et al’s (2003) Megaprojects and Risk.

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