Argument

Numbers Game

Numbers Game

The Olympic motto, "Citius, Altius, Fortius" (faster, higher, stronger) might be good inspiration for an athlete training for the games, but for a nation looking for Olympic glory, a more useful dictum might be "maior, ditiores, communistarum" – bigger, richer, communist. While upsets are always possible in any individual event, the factors that make a nation an Olympic powerhouse are pretty clear, and it’s surprisingly easy to predict which countries will come out on top.

Shortly before the 2000 Sydney Olympics, two economics papers appeared within days of each other looking at the determinants of gold medal success. Remarkably, both came to virtually the same conclusion about what makes a nation an Olympic champion. Ever since then, the lead authors of each paper, Andrew Bernard of Dartmouth’s Tuck School of Business and Daniel Johnson of Colorado College, have been using these factors to make predictions before each Olympics, sometimes with uncanny accuracy.

"When we compared [the final medal count] with the expected result in 2000 we thought we had made a horrendous error. It was like a .96 correlation. You don’t get that sort of result in an economic model," says Johnson. But Johnson soon realized this shouldn’t actually be that surprising at all, as overall Olympic success is remarkably predictable. By far, the most important factors are population size and gross domestic product (GDP) per capita.

The models don’t look at individual athletes or sports, but national team performance as a whole. "Olympic athletes are like complex machines. The more people there are, the more machines there are. The more resources-per-person each country has, the more these machines can be invested in and turned into Olympic athletes," says Emily Williams, a recent MBA graduate from Tuck and Ph.D. candidate at London Business School who has taken over the work on Bernard’s model for predicting the London games. GDP, in particular, is a large part of why the United States holds a nearly insurmountable lead in the all-time count with 2,296 medals —  whereas Russia/Soviet Union comes in a distant second at 1,327. (Russia’s historical performance is perhaps more impressive given its much lower GDP and population figures and it also holds a clue as to what can make a nation punch above its weight.)

This may seem intuitive enough, but there are a couple of other ways a country can gain a leg up. One is to actually host the games. This might be partly due to home-field advantage — less travel, familiarity with the facilities — and partly because the host country tends to field more athletes, but it’s also because countries tend to invest more in sports generally when they host the games. Whether or not countries actually make money on the Olympics, hosting can be a powerful signaling mechanism for a country looking to prove its place in the global economy. And that signal ideally includes fielding competitive athletes in addition to building shiny new stadiums. Greece, for instance, took home 16 medals in 2004, when it hosted the Athens games, but only four in Beijing.

One other factor that both papers found helps countries rake in the medals is a bit more surprising: communism. Throughout the Cold War, when medal counts became a matter of not just national but ideological pride, communist governments like the Soviet Union and East Germany were able to much more efficiently allocate government resources to build sporting powerhouses and consistently outperformed predictions made on size and GDP alone. This wasn’t just true for the Eastern Bloc. Cuba, for instance has won more than twice as many summer Olympic medals as Brazil, despite having only a fraction of its wealth and population.

Given these factors — size, wealth, host, communist (or at least single-party) — China’s impressive performance at the 2008 games (100 medals, 51 of which were gold) was hardly surprising. "You would almost expect them to run the table," says Johnson. But China actually outperformed the models. Johnson’s model predicted 79 medals for China in 2008, while Bernard’s gave it 81. According to Johnson, China has been "historically the most difficult country to predict."

The only other country in China’s heavyweight population division — India — has historically been one of the Olympics’ great underperformers, with only 20 summer medals all-time. That’s tied with Slovakia, which has only been a country since 1993 and has .4 percent of India’s population. The world’s largest democracy has never really made sports spending a priority. Plus, several of the sports that Indians do excel at internationally like cricket and squash aren’t Olympic events. Johnson’s model predicts 7 medals for India in the 2012, though it won only three in Beijing.

The country that most consistently outperforms expectations is Australia, which has the most medals per capita over the last three games. Yes, Australia is traditionally a sporting culture and the fact that 85 percent of the country lives within 30 miles of the ocean may contribute to their historic dominance in swimming. But it also shouldn’t be surprising to learn that after a disappointing zero gold medal performance in 1976, the Australian government embarked on a massive centralized training program to spur Olympic glory — modeled on the youth sports academies of the Eastern Bloc. Ahead of the 2000 Sydney games, the country spent $20 million on scientific research aimed at improving its athletes’ performance. Australia might be a democracy, but since the 1980s, it’s taken a near-Soviet approach to preparing for the Olympics — and it’s been among the top 10 medal count nations since 1992, including an impressive 58-medal performance in Sydney.

So what do the numbers predict for London? Johnson’s prediction has the United States in first place with 99 medals. Russia, which underperformed its prediction by 11 medals last time, will still be second with 82. China will come in third with 67 medals, though it will win more golds than Russia (but 67 medals would likely be a major disappointment after the Beijing haul). And homefield advantage will boost Britain into fourth place with 45. This year, Johnson is de-emphasizing the communist metric of the equation because the sample size is so small in the post-Cold War world; so it may be interesting to watch what that means for countries like Cuba and Vietnam.

Williams, using Bernard’s formula, which has historically been more accurate (because it includes by far the best indicator for medal count: who won last year), has the same top four but in a different order. She gives the United States 103 medals, followed by China with 94, and Russia with 67. Her projections are more optimistic for her home country, Britain — which is predicted to bag 62 medals, its highest count since the London games of 1908, when it won nearly half the medals awarded.

There’s also a new kid on the block in the medals prediction game. Using an expanded series of metrics that includes "political conditions, macroeconomic stability, macroeconomic conditions, human capital, technology and the microeconomic environment," economists at Goldman Sachs have produced their own predicted medal table giving the U.S. 108 medals, 98 for China, 74 for Russia, and 65 for Britain.

Accurate as these models are, it’s the deviations from the mean that make the Olympics fun. Watching Michael Phelps trounce the rest of the world in the pool might be fun for a while, but without the possibility of an upset, who would watch? Williams predicts that the most interesting story in the next few Olympics may not be China, but smaller developing countries that are slowly increasing their share of the medal count.

"I’m glad the model’s not always accurate," Johnson says. "Otherwise we could just mail out the medals in advance."