{"id":200,"date":"2026-05-04T11:00:45","date_gmt":"2026-05-04T15:00:45","guid":{"rendered":"https:\/\/people.bsu.edu\/econbriefs\/?p=200"},"modified":"2026-05-04T11:00:45","modified_gmt":"2026-05-04T15:00:45","slug":"olympic-economics-costs-incentives-and-the-pursuit-of-gold-by-dr-cecil-bohanon-and-dr-john-horowitz","status":"publish","type":"post","link":"https:\/\/people.bsu.edu\/econbriefs\/2026\/05\/04\/olympic-economics-costs-incentives-and-the-pursuit-of-gold-by-dr-cecil-bohanon-and-dr-john-horowitz\/","title":{"rendered":"Olympic Economics: Costs, Incentives, and the Pursuit of Gold\u2013 by Dr. Cecil Bohanon and Dr. John Horowitz"},"content":{"rendered":"

During the Milan\u2013Cortina 2026 Winter Olympics, Team USA finished second to Norway, earning\u00a0<\/span>12 gold medals and 33 total medals<\/span><\/a>.\u00a0However,\u00a0the Games offer more than athletic drama;\u00a0they\u00a0teach valuable economic lessons.\u00a0<\/span>\u00a0<\/span><\/p>\n

Scarcity and Tradeoffs<\/span><\/i>. Every euro spent on the Olympics is a euro not spent elsewhere. The Milan\u2013Cortina organizing committee reported an\u00a0<\/span>operating budget of about \u20ac1.7 billion<\/span><\/a>\u00a0(\u2248 $1.9B), a\u00a0<\/span>figure that excludes the far larger \u20ac3.5\u20133.8 billion required for infrastructure<\/span><\/a>\u00a0such as new venues, roads, and rail lines. Total costs are now estimated between \u20ac5.2 and \u20ac5.7 billion, or $6.1\u20136.7 billion, after repeated overruns. Italian taxpayers fund most of these\u00a0infrastructure\u00a0expenses.\u00a0<\/span>\u00a0<\/span><\/p>\n

Incentives,\u00a0Drive,\u00a0Decisions<\/span><\/i>. Research summarized in\u00a0\u201c<\/span>Going for the Gold: The Economics of the Olympics<\/span><\/a>\u201d\u00a0finds that host cities do enjoy short<\/span>\u2011term boosts in tourism and global visibility, but long<\/span>\u2011run economic returns tend to be small or negative. Cities continue to bid not because the\u00a0economics\u00a0justify it, but because leaders benefit from prestige, international attention, and optimism bias.\u00a0<\/span>\u00a0<\/span><\/p>\n

Mega<\/span><\/i>\u2011Projects and Cost Overruns<\/span><\/i>. The Olympics repeatedly illustrate\u00a0that\u00a0<\/span>large public projects almost always cost more than expected<\/span><\/a>. Milan\u2013Cortina is no exception;\u00a0its budget ballooned from an early\u00a0estimate of \u20ac1.3 billion\u00a0to \u20ac5.7 billion. Efforts to economize, such as reusing existing venues, often fail to produce meaningful savings, according to\u00a0Olympic research.<\/span>\u00a0<\/span><\/p>\n

Few\u00a0Olympic\u00a0athletes earn substantial sponsorship income<\/span><\/a>, and many work additional jobs to cover basic training expenses\u2014<\/span>including coaches, equipment, travel, and competition fees<\/span><\/a>. In 2020, Michael Phelps produced and narrated the documentary\u00a0<\/span>The Weight of Gold<\/span><\/a>, which highlights the depression and anxiety many elite athletes face, particularly\u00a0<\/span>after injuries or retirement<\/span><\/a>.<\/span>\u00a0<\/span><\/p>\n

So why do they compete?<\/span>\u00a0<\/span><\/p>\n

Economists\u00a0answer\u00a0that\u00a0the expected utility of competition exceeds its opportunity costs, the value of the next-best alternative they give up. Although many athletes experience financial strain, physical injury, and serious mental<\/span>\u2011health risks, the Olympic incentive structure is tournament<\/span>\u2011like: a low probability of extremely high rewards. These rewards include endorsements, professional contracts, recognition, status, identity, meaning, and social admiration.<\/span>\u00a0<\/span><\/p>\n

For many athletes, the pursuit of excellence offers psychological benefits, purpose, mastery, and belonging that offset financial uncertainty and physical and emotional risk. This\u00a0makes\u00a0participation a rational choice within a broader conception of well<\/span>\u2011being.<\/span>\u00a0<\/span><\/p>\n

\u00a0The Olympics remind us that while the financial rewards are uncertain, the human drive for excellence, identity, and meaning remains one of the most powerful economic forces in the world.<\/span>\u00a0<\/span><\/p>\n

\u00a0<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

During the Milan\u2013Cortina 2026 Winter Olympics, Team USA finished second to Norway, earning\u00a012 gold medals and 33 total medals.\u00a0However,\u00a0the Games offer more than athletic drama;\u00a0they\u00a0teach valuable economic lessons.\u00a0\u00a0 Scarcity and Tradeoffs. Every euro spent on the Olympics is a euro not spent elsewhere. The Milan\u2013Cortina organizing committee reported an\u00a0operating budget of about \u20ac1.7 billion\u00a0(\u2248 $1.9B), […]<\/p>\n","protected":false},"author":112,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[85],"tags":[1745,1344,1744,1246,272,1746,1743,906,600,1363],"class_list":["post-200","post","type-post","status-publish","format-standard","hentry","category-macroeconomics","tag-athlete-compensation","tag-behavioral-economics","tag-cost-overruns","tag-economic-impact","tag-incentives","tag-mega-projects","tag-olympics","tag-opportunity-cost","tag-public-spending","tag-tourism"],"yoast_head":"\nOlympic Economics: Costs, Incentives, and the Pursuit of Gold\u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/people.bsu.edu\/econbriefs\/2026\/05\/04\/olympic-economics-costs-incentives-and-the-pursuit-of-gold-by-dr-cecil-bohanon-and-dr-john-horowitz\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Olympic Economics: Costs, Incentives, and the Pursuit of Gold\u2013 by Dr. Cecil Bohanon and Dr. John Horowitz - Econ Briefs\" \/>\n<meta property=\"og:description\" content=\"During the Milan\u2013Cortina 2026 Winter Olympics, Team USA finished second to Norway, earning\u00a012 gold medals and 33 total medals.\u00a0However,\u00a0the Games offer more than athletic drama;\u00a0they\u00a0teach valuable economic lessons.\u00a0\u00a0 Scarcity and Tradeoffs. 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