Going for Gold? The intangible effects of the 2012 Olympic Games in London and Paris

Lead Research Organisation: London School of Economics and Political Science
Department Name: Social Policy

Abstract

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Description This project aimed to measure the intangible impact of the 2012 Olympic Games in London, Paris and Berlin, using subjective well-being (happiness) data. We collected primary longitudinal data of individuals living in each of these cities in the summer period of 2011 (pre-Games), 2012 (Games), and 2013 (post-Games, legacy). In this quasi-natural environment setting, we are primarily interested on the impact the Olympics had on measures of subjective well-being - currently used by policy-makers to assess how well life is going - and behaviour change in London (positive treatment group: bid and won) relative to Paris (negative treatment group: bid and lost) and Berlin (control: did not bid).

Our main result is that the Olympics increased the subjective well-being of Londoners during the event, relative to Parisians and Berliners. In terms of potential "legacy" effects, however, we find that the intangible impact of the Olympics appears to be short-lived: while the effects are especially strong around the opening and closing ceremonies, we do not find strong evidence of lasting changes in subjective well-being in the hosting city after one year. We do not find evidence suggesting that performance at such events (i.e., medals) matters for subjective well-being. All these results are robust to controlling for a rich set of observables, including macroeconomic and meteorological conditions, selection into the survey and attrition, and the choice of the counterfactual. They also withstand a series of placebo tests.

Furthemore, we estimate that residents' implicit willingness-to-pay and arrive at a range between £2.2 and 7.4 billion for the monetary equivalent of hosting the Olympics on the life satisfaction of Londoners. We conclude that a case could be made that hosting was actually worth the costs.

Our findings are important for several reasons. First, it is unclear whether the major sports events increase subjective well-being in the host city; unintended consequences such as congestion could, in fact, reduce subjective well-being among residents of the host city. Second, any comprehensive cost-benefit analysis of hosting the event should take intangible effects into account, especially given the negligible tangible effects found in the literature. Third, the implicit willingness-to-pay for hosting the Olympics has not been thoroughly elicited using subjective well-being methods. Fourth, the case for hosting is typically made by stressing intangible long-run effects; we show that such effects are not very perceptible one year after the event.

More generally, our results provide important insights for those seeking to value mega events-or indeed any intangible effects-using subjective well-being measures. Such measures are increasingly recognized as an important device in the economist's toolkit of valuation as reflected, for example, in the revised guidance found in the UK Treasury Green Book for policy/project appraisal and evaluation. In the very least, we establish that subjective well-being measures, where attention is not focused on the intangible good in question, are responsive to changes in that non-market good.
Exploitation Route The outcomes of this project are of direct interest to academics working in economics, psychology and behavioural science. We have presented our work at academic conferences and departmental seminar series and articles are submitted in internationally renowned academic journals.

Efforts for countries/cities to host major sports events such as the Olympics, the FIFA World Cup, the Commonwealth Games, etc., are ongoing. Compared to existing research presenting evidence on seldom intangible benefits of hosting such events, this project offers a more comprehensive account of the intangible effects of such sports events and contribute further to the science of wellbeing measurement. Given the research team's strong links with policy makers, we anticipate that future hosts, and those interested in bidding to host a sports event, will be interested in the outcome of our study and wish to discuss with us ideas and avenues that will result in increasing these intangible benefits.

For non-academic audiences, we disseminate the findings of our research to a wide audience through the media and social media. Many members of the research team have been repeatedly interviewed by the media regarding the implications of their research related to subjective well-being and major sports. This particular study has been featured in outlets such as The Financial Times, The Times, The Guardian, The Wall Street Journal, and media outlets in Germany and Greece. Members of the team have also given radio interviews on the findings of this project. We anticipate that this project will continue receiving substantial attention from the media and act as a reference when policy and media discussions revolve around matters of hosting a sports event of a similar scale.
Sectors Communities and Social Services/Policy,Financial Services, and Management Consultancy,Leisure Activities, including Sports, Recreation and Tourism,Government, Democracy and Justice
 
Description Going for Gold: Narrative Impact 1. How have your findings been used? Please provide a brief summary. Work resulting from this grant has been released as working papers and are submitted for publication in peer-reviewer academic journals. We have spoken in public about the project. For instance, during the World Cup in 2014 Stefan Szymanski spoke frequently with journalists about the impact of major sporting events. He argued that these events do not generate significant economic benefits but do contribute significantly to happiness. He spoke about the research at the International Sports Business Congress at Manchester City's Etihad Stadium on July 18 2014. This was reported in the Manchester Evening News. He referred to the role of happiness in sporting events in the Irish Examiner, January 3, 2013, Financial Times, January 31, 2014, Forbes, June 9, 2014, The Advertiser (Australia), July 8, 2014. 2. Date first materialized Not applicable. 3. What types of impact have arisen from the research? We see significant impact on the two areas we identified in the proposal. The first aim is directed at significant academic and policy questions relating to valuing public goods. There are many important questions in valuing the intangible effects of events and interventions. For instance, who to ask, what questions to ask, when to ask, and how you ask it, are all significant and important questions when it comes to non-market valuation for policymakers. These questions cut across many different areas and government departments, for instance environmental economics, health economics, transport economics, and sports economics. Much of the current practices at the organisational or governmental level do not take into account these issues from a holistic perspective. We hope to significantly address that at the policy level. We believe that our assessment method will have significant contributions to the assessment of smart city developments. We believe that linking to smart cities proposals holds significant opportunity given that smart cities investment will be $400bn by 2020 and that their main objective is to improve people's wellbeing. We also believe our research has practical effects for planners of major sporting events, by identifying those communities which are most likely to benefit and most likely to get involved with these events. By identifying those aspects of the event that generate most interest (e.g. opening ceremonies) we believe that event planning can become more focused. The 'science of wellbeing' and issues of relating wellbeing to public policy is obviously a recent phenomena and has involved many members of this research team. Members of this team actively help and advise the ONS of measuring wellbeing. The outcomes of this research will be directly fed into the way the ONS measures wellbeing across the UK. We have had some impact already. Our project was mentioned in a Parliamentary discussion of the "All-Party Parliamentary Group on Wellbeing Economics" in March 2013 - the event was also open to the public. We have also described the project at various other conferences and panels, such as the World Economic Forum and the panel on wellbeing at the National Academy of Sciences in the United States. We have also had discussions with Sir Robin Wales about the impacts of the Olympics in London and especially Newham since that is where he is currently Mayor. Our project is the first ever-comprehensive wellbeing analysis of a large event funded by a government across the World. We believe that other project developers and appraisals will adopt this wellbeing evaluation approach. 4. In which sectors has your research been used? Not applicable until we publish the academic outputs.