Economics of the Rugby World Cup

There was a good article in today’s Press by Jenny Keown on the economics of the 2011 Rugby World Cup. It is a pretty good summary of how forecasts of spending were lower than expected or offset by compensating reductions.

Keown interviewed me for the article, and I pointed her in the direction of the blog posts by Eric, Paul at Anti-Dismal, and Sam Richardson, although, of these, she only cites Sam. I am also quoted at the end:

"It's a failing of my profession that hucksters give any answer [before the event] they are paid to give. The economics of sporting events don't exist. If you want to spend money on an event, whether it be the Olympics or the Rugby World Cup, it comes down to the feel-good factor."

That is a slight misquote. Of course the economics of sporting events exists. What doesn’t exist are benefits of sporting events from increased economic activity as opposed to the benefits from consumption of the events themselves. The “feel-good factor” is simply the benefits that accrue to people like me who didn’t spend a cent on tickets, Sky TV (at the margin), or World Cup merchandise, but still received some utility from the event's being staged in New Zealand.

My only quibble with the article is that a reader might get the impression from the take-down on how forecasts of spending turned out to be too optimistic (delightfully referred to by NZIER’s Shamubeel Eaqub as “hopium”), that there would have been tangible economic spillover benefits from the Cup had spending patterns turned out as forecast.