The Gold Medal Chase
I have a wager with a friend on which country will win the most gold medals. It’s not very patriotic, but I have China, and he has the United States.
Dartmouth economist Andrew Bernard, who has built an econometric model to predict Olympic medals, thinks it’s a coin toss.
Bernard’s model couldn’t be much simpler: the main variables that go into the prediction are a country’s population, GDP per capita, how many medals they won in the last Olympics, and whether they are the host country. Historically the model has predicted well. (As an aside, if you ever need to predict anything and you are only allowed one variable, using what happened last time is probably the best variable you will ever find.)
When it comes to predictions, however, I put more faith in markets than I do in any individual economist. Just before the start of the opening ceremonies, Tradesports had China twice as likely as the United States to win the most gold medals. The volume was extremely low — only $1,000 in trades total — but still that gave me confidence.
I have to believe that when a country with as much at stake in these Olympics as China sets its mind on finding ways to beat the anti-doping rules, they will succeed.
So far, the results are consistent with my conjecture. China leads the U.S. 11-7 in gold medals and Tradesports now has China as 78 percent likely to win the most gold medals.