The 2012 Olympic Games caused a marked increase in happiness among Londoners, according to our research, which shows for the first time that there are significant intangible effects to hosting the event.
As the 28th summer Games open in Rio de Janeiro this week, the $4.1 billion bill will be relatively modest compared to the $15 billion spent in London. However, with Brazil heading into a deep recession, public support for the event has fallen, with a recent poll showing that 50 per cent of Brazilians think the money could be better spent elsewhere.
Most academic studies have found little evidence of any tangible long-term economic impact, with the most recent concluding that in most cases the Olympics are a money-losing proposition for host cities.
With this in mind, we set out to study the nature and extent of the “intangible” impact of the Olympic Games by using measures of subjective wellbeing that have been developed and tested by economists and psychologists for around 20 years in order to assess how people think and feel about their lives.
Many proponents of the Games now suggest that one of its main contributions is the intangible impact on the people who host them. The UK government’s assessment of the 2012 Summer Olympics in London focused on intangibles such as ‘inspiring a generation of children and young people,’ community engagement, and enthusiasm for volunteering.
There is also evidence that citizens are willing to pay substantial sums to host these events. A national opinion poll conducted immediately after the 2012 Olympics found that 55 per cent of respondents believed that the public expenditure of the Games had been well worth the investment. Arguably, an important part of the value of public expenditure is the legacy effect, i.e. the long-term benefits of the Olympics.”
We compared levels of happiness in London, Paris and Berlin, interviewing 26,000 residents over three years from 2011 to 2013. We found that Londoners were significantly happier during the Games compared to Parisians and Berliners, but that levels of happiness returned to normal the following year. The opening and closing ceremonies, the two most watched and most expensive events in terms of ticket prices, had the most marked effects on levels of happiness.
The report, The Host with the Most? The Effects of the Olympic Games on Happiness, charts how, until the 1960s, the Olympics were relatively modest affairs with limited finance and investment. The television era of watching sport, combined with the capacity to reach a global audience enhanced the prestige of the event and encouraged fierce competition amongst cities to host the Games, resulting in a significant rise in expenditure on staging them. The 1956 Summer Olympics in Melbourne cost approximately $63 million in 2016 prices. In contrast, the 2012 summer Olympics in London required government subsides of $15 billion alone to cover the direct costs.
Overall, many cities spend substantial resources attracting and then hosting the Olympic Games, but the evidence to date suggests that the Olympics do not have a significant economic benefit to the host city. This paper presents the first causal evidence of a positive wellbeing effect of the Olympic Games on local residents during the hosting of the Games. The effects do not last very long, however, and the Games show no effect on subjective wellbeing a year later. The host with the most. But not for long.
The London Olympics was a great spectacle which had a sizeable but short-lived effect on happiness.
- This post is based on the paper The Host with the Most? The Effects of the Olympic Games on Happiness, by Paul Dolan, Georgios Kavetsos, Christian Krekel, Dimitris Mavridis, Robert Metcalfe, Claudia Senik, Stefan Szymanski and Nicolas R. Ziebarth, CEP Discussion Paper No 1441, July 2016
- The post gives the views of its author, not the position of LSE Business Review or the London School of Economics.
- Featured image credit: Ring ring ring ring ring, by Peter Burgess, CC-BY-2.0
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Paul Dolan is Professor of Behavioural Science at LSE. He has over 15000 citations and has worked with Nobel Laureate Daniel Kahneman at Princeton University. He is Director of Executive MSc Behavioural Science. There are three main themes to Paul’s work: 1) Developing measures of happiness and subjective wellbeing that can be used in policy and by individuals looking to be happier. He wrote the questions that are currently being used by the Office for National Statistics in the UK to monitor national wellbeing: 2) Considering ways in which the lessons from the behavioural sciences can be used to understand and change individual behaviour, and to add to the evidence base in this regard. He was author of the MINDSPACE report for the UK Cabinet Office, which he uses widely in consulting with public sector and corporate clients; and 3) Using lab and field experiments to bring together (1) and (2) above.
Georgios Kavetsos is an Assistant Professor in Behavioural Science at Queen Mary University of London. The first theme to his research seeks to understand how interventions shape individuals’ behaviour and preferences. The second studies the impact behaviours and interventions have on individuals’ well-being. Georgios holds a PhD in Economics from Imperial College Business School. Prior to joining Queen Mary, he held research positions at Cass Business School and the London School of Economics, where he is affiliated with the Centre for Economic Performance. Personal website: www.gkavetsos.com