Enjoyment of the Upcoming World Cup Will Come at a Price: News: The Independent Institute

The World Cup kicks off on November 20 in Qatar and a record 5 billion people are expected to watch. Fans may not know that the month-long tournament measurably harms global economic output, as the games capture the time and attention of countless business owners, managers and employees. But governments can mitigate the loss by adopting policies that advance economic freedom and human progress.

Two economists used statistical tools to measure the impact of the World Cup on the annual growth of gross domestic product (GDP) per capita in 185 countries from 1950 to 2004. The finals, which feature 32 national teams, are played all all four years, and the researchers found a decline of about 0.75 percentage points in average global inflation-adjusted GDP growth over those years. This discount is the “price” that people “pay” for the pleasure of watching the tournament. But this cost is not shared equitably.

Residents of some countries are more interested in football in general, and the World Cup in particular, than residents of other countries. Additionally, some countries have teams that progress more in a given year and consistently over the years. These factors concentrate viewer interest and associated production losses in specific countries and continents.

Economists have found that countries in Europe, South America and North America experience the largest average declines in GDP growth during World Cup years. Countries in South America, where the aggregate effects are greatest, experience an average decline in GDP growth of 0.9 percentage points in World Cup years, plus another reduction of 2.1 points if their national team qualifies for the final, another reduction of 4.1 points if their team plays in the league game, and another reduction of 4.5 points if the country hosts the final.

Given these effects, production growth can easily turn negative in countries like Argentina and Brazil, where fan interest and tournament success are strong. But governments can adopt policies that counteract the reduction in GDP growth during the World Cup years and beyond.

The favorites to win the 2022 World Cup are Brazil, defending champions France, Argentina and England. None of these countries has the best policies to encourage entrepreneurship, optimal investment, low inflation and strong income growth, according to the economic freedom of the world report. Each year, this report assesses the economic policies and institutions of 165 countries. Policies that advance economic freedom and income growth include lower tax rates, protection of private property rights, impartial courts, a stable currency, market-determined interest rates, low barriers to international trade and low government barriers to starting and operating businesses and hiring and hiring. employee management.

According to the recently released 2022 report, England (UK) ranks 22nd in economic freedom, France 54th, Brazil 114th and Argentina a dismal 161st, fifth worst. Venezuela, which has a corrupt authoritarian socialist government, ranks dead last.

If economic freedom were expanded by removing restrictive union rules, eliminating occupational licensing laws, or removing minimum wage requirements, production might not decline during World Cup years due to greater freedom to work staggered hours or change personnel decisions. In the long run, when a country’s economic freedom rises from the lowest 25% to the highest 25%, per capita income increases sevenfold, life expectancy increases by 14 years, infant mortality rate 87% drop, school enrollment increases, and overall happiness improves.

People around the world will enjoy the beautiful game of this World Cup season, and a champion will be crowned on December 18. But this pleasure will have a price. In the years to come, governments should reduce this price and achieve long-term gains for the people by adopting policies that increase economic freedom, personal income and human flourishing.

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