Olympics and City Economies

Olympics boosters like to say that the games will substantially help lift a city's economy. New York City's bid for 2012, for example, claimed employment would rise by 135,000 and revenues by $12 billion.

The interactive below shows the per-capita city G.D.P. for each of the last four sites that held the summer Olympics. Can you guess the year in which each city was a host?

Sources: I.M.F., e-forecasting
If not, that's ok, because that's the point. Studies of "mega events" like the Super Bowl, World Series, college sports, and various Olympics have all nearly universally arrived at the same conclusion: the economic impact of hosting is minimal, if not negative.

The typical explanation for the small benefit is that the new money pumping through the host-city isn't additional money but replacement money. To avoid the throngs, locals either stay home or go somewhere else to consume. At this year's event in China, Goldman Sachs points to another reason why growth will be inconsequential:

Restrictions on construction, factories, cars and mining to cut pollution and traffic will be a ``short-term'' drag on economic output, Goldman said in a report. Most limits are imposed in Beijing and five nearby provinces and cities, which generate about 26 percent of China's economic output, Hong Kong- based analysts Yu Song and Hong Liang wrote in the Aug. 8 report.

``These measures will likely lead to a visible slowdown in real economic activities, both production and consumption, in August and September,'' the Goldman report said. Though activity will pick up in October, ``we expect a gradually softening economic path in the second half of 2008,'' the analysts wrote.