Does the World Cup Stunt Economic Growth?

New research suggests the World Cup may stunt economic growth. Is this really true?

Jul 5, 2014 at 6:43AM

Soccer is the world's favorite sport, and the World Cup is its apex in terms of popularity. More than 3 billion people will take in at least one minute of this year's action, if past tournaments are any indication. But there may be a downside to this fervor. A team of economists suggest the productivity loss that occurs during a World Cup could be significant enough to -- don't freak out -- stunt economic growth. Could this really be true?

Digging into the data
Professors Craig Depken and Dennis Wilson analyzed this issue as part of a working paper series titled "The Long-Run Impacts of the World Cup." The research takes over 50 years of nations' economic data, and compares it with their Cup success over the same time period.


Mexico vs. Brazil-2010 WC. Celso Flores, Flickr.

Depken and Wilson hypothesize that in countries where football is in high demand, "individuals ... might 'purchase' their enjoyment of the World Cup with reduced GDP growth in the year the finals take place." And the examples aren't hard to find. In Argentina, the duo points out, the 2004 World Cup appears to have lowered real per-capita GDP from $12,000 to $10,000. Fourteen years earlier, in 1990, a title game appearance likely lowered Argentineans' per-capita income by $600, the study also says.

So naturally, this means per-capital GDP should fall further the deeper a team makes it into the World Cup, right? That's just what Depken and Wilson found. In a subset of countries, including Brazil, economic growth is stunted by Cup success. They write:

For instance, suppose Brazil advances from the round-robin first round to the second round of play ... the single elimination tournament now invites Brazilians to watch other matches in anticipation that one or the other participants might eventually square off against their team. Thus, the further the Brazilian team advances in the tournament the more time is spent watching soccer, by some number of people, and less time is necessarily spent in productive activities.

In other words, the final stages of the tournament become a bigger distraction. During the 2002 World Cup, for instance, Depken and Wilson report Brazil's victory coincided with a per-capital GDP shrinkage of -2.2%. If Brazil wouldn't have participated in that year's tournament, they write, this growth rate would've likely been positive. 

What about Brazil this year?
According to the study, the World Cup's effect on per-capital GDP also appears to vary by country, which makes sense. Some areas of the world adore football to a greater degree than others do. Depken and Wilson find little relationship between Cup success and economic growth in Oceania, in particular. In Europe, North America, and South America, on the other hand, there's a measurable link between both variables. In the latter three continents, per-capita GDP growth falls by about one percentage point during World Cup years.

The obvious question is: What about Brazil this year? If history is any indication, the country won't avoid a productivity loss. This flies in the face of assertions that the World Cup will lead to a net economic gain for the country. Its tourism minister, for example, tells The Wall Street Journal that nearly $3 billion in extra spending is expected. 

Although Brazil could always buck the trend this year, Depken and Wilson reject the notion from a theoretical standpoint. "While individuals watching sports might spend on beer, food, and other services, it is unlikely that they are spending more (in the short run) than they are worth in terms of national production," they write. In fact, as The Economist points out, the São Paulo Federation of Commerce reports Brazil's total "output lost" from this year's tournament may hit $14 billion.

The bottom line
To be clear, Depken and Wilson don't suggest countries should ban the World Cup. Rather, they interpret their findings as a measure of fans' willingness to pay for the tournament. Those in some countries, like Brazil or Argentina, are simply more willing to give up productivity -- and thus, income -- to keep track of the sport.

At the end of the day, though, further research is needed. Is there truly a cause-effect relationship between the Cup and productivity? Do other major sporting events, like the NCAA Basketball Tournament, drain economic growth? What about the Super Bowl?

And of course, sociological impact must be accounted for as well. Given the record levels of television viewership and social media interaction surrounding this year's World Cup, it's possible cultural unification is worth a little productivity loss.

Don't make millions playing football for a living?
That's alright. But it doesn't mean you can't start saving -- intelligently -- for retirement. In The Motley Fool's brand-new free report, our retirement experts give their insight on a simple strategy to take advantage of a little-known IRS rule to help you retire on your terms. Click here to learn more.

Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers