This is Scientific American's 60-Second Science. I'm Steve Mirsky.Got a minute?
"The average cost overrun since 1976 for the Summer Olympics is 252 percent."
Smith College economist Andrew Zimbalist, who specializes in sports economics.
"So on average if you bid $5 billion you're going to end up spending somewhere in the neighborhood of $17.5."
Zimbalist spoke February 5th at the Bergino Baseball Clubhouse in Manhattan about issues he addresses in his new book Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup.
"I think that the countries that have hosted those events, with two exceptions, Los Angeles in 1984 and Barcelona in 1992, have not benefited economically, and some of them have been significantly hurt."
Boston hopes to host the 2024 Summer Olympics.
Zimbalist thinks that the city is probably better off losing their bid.
"Both in the case of the World Cup and the Olympics there's a monopolist seller of the rights to host the games.
And what they do is basically they orchestrate an international competition.
That process where you have one seller and multiple competitors is one that leads to something that economists call a winner's curse.
That is, most of the bidders will agree with each other, more or less, that it makes sense to spend only so much on the games and there will be one bidder that's an outlier.
So the one that is the outlier and bids the most is the one that ends up winning.
And that outlier is the one that thinks that the Olympics is worth more than everybody else.
And so that usually leads to winner's curse."
For more from Zimbalist on the economics of the Olympics and the World Cup, look on our website for the upcoming Science Talk podcast.
Thanks for the minute, for Scientific American's 60-Second Science. I'm Steve Mirsky.