Every four years, the nations ~f the world compete in ‘the Olympic Games. When the games end commentators use the number of-medals a national take~home as ‘a measure of success. This measure seems very different from the GDP economists use to measure-success. It turns out, however, that this is not so Economists Andrew Bernard and Meghan Busse examined die determinants of Olympic success in a study published in the Review of Economics and Statistics in 2004. The most obvious explanation is population: Countries with more people will, other things equal, have more star athletes. But this is not the full story. China, India, Indonesia, and Bangladesh together have more than 40 percent of the world’s population, but they typically win only 6 percent of the medals. The reason is that these countries are Despite their large populations, they account for only 5 percent of the world’s GDP. Their poverty many gifted athletes from reaching their potential Bernard and Busse find that the best gauge of a nation’s ability to produce world-class athletes is total GDP. A large total GDP means more medals, regardless of whether the total comes from high GDP per person or a large number of people. In other words, if two nations have the same total GDP, they can be expected to win the same number of medals, even if one nation (India) has many people and low GDP per person and the other nation (Netherlands) has few people and high GDP per person In addition to GDP, two other factors influence the number of medals won. The host country usually earns extra medals, reflecting the benefit that athletes get from competing on their home turf. In addition the former communist countries of Eastern Europe (the Soviet Union, Romania, East Germany, and so on) earned more medals than other countries with similar GDP. These centrally planned economies devoted more of the nation’s resources to training Olympic athletes than did free-market economies, where people have more control over their own lives .

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