An economic crisis may make you stronger – in football

Economic modelling predicts that Germany is the most likely country to qualify for the semi-finals at the 2014 World Cup. EPA/Andreas Gebert

Forget Lionel Messi, Cristiano Ronaldo or Mario Balotelli. What will make your country more (or less) likely to succeed in the World Cup is its rate of economic growth.

At this point, I expect European football fans to be in tears. If economic growth matters for World Cup success, then the debt crisis of 2011-13 must surely mean no European team will make it to the semi-finals, maybe not even to the quarter-finals.

This, however, is wrong. Economic growth does matter, but in reverse. The data I have analysed indicate a negative relationship between economic growth and success in the World Cup. In other words, the lower a country’s rate of growth is, the more likely this country is to make it through to the semis.

And that’s not the end of the story. After accounting for the rate of growth, richer countries are more likely to reach the semi-finals. Therefore, a national team representing a country with an advanced (that is, rich) economy that comes out of a bad recession is in an ideal position to have a highly successful campaign in Brazil.

Using data from 1986 to 2010, I estimated a model that explains the success of countries in the past seven World Cup tournaments. The measure of success that I considered is whether or not a country made it to the semi-finals. This success is expressed as a function of the level of country’s per capita GDP and its rate of economic growth in the five years preceding the World Cup.

These two variables – per capita GDP and growth rate over five years – are those that best explain past outcomes (previous World Cup results) and therefore are likely to provide the best prediction for future outcomes. Other economic indicators such as inflation and employment growth seem to have a much weaker connection with a country’s football achievements.

And the semi-finalists will be…

It would be clearly unreasonable to think that economics is the only thing that matters. In the end, some countries simply are better at football than others. It might be because in these countries football is traditionally practised by more people, and/or because these countries traditionally have better “schools” of football.

So, to capture this effect, I also included the number of times that a country reached the semi-finals in the previous five editions of the World Cup in the model.

The model estimates confirm that the probability of a country to be successful – to reach the semi-finals in any given World Cup – increases:

  1. the higher the level of per capita GDP in this country;
  2. the lower its rate of GDP growth; and
  3. the more semi-finals it has played in previous World Cups.

The estimates based on the period between 1986 and 2010 can then be used to predict the probability that a country will reach the semi-finals in 2014, given its current level of per capita GDP and its rate of growth in the past five years. Save for Algeria due to the lack of certain economic data, these estimated probabilities are reported in the figure below.

Probability of each country of reaching the semi-finals. Author

So, a group of five countries – Germany, the Netherlands, France, Italy, and Brazil – has a very high probability to make it to the semi-finals. Not surprisingly, four of these are European countries. The recession does pay off – but maybe only in football.

The second-tier group includes four countries – Croatia, Portugal, Spain and Greece – which, again, are all victims of the economic crisis. England is in the third tier, along with United States, Belgium and Switzerland. South Korea is suspended somewhere between the second and the third tier. Australia leads the fourth-tier group, with a 14% probability to make it to the semi-finals.

Most football fans would disagree with the extremely low probability assigned to Argentina. But with an average rate of economic growth of 5% per year for the past five years, Argentina is simply doing too well economically to hope to do well in the World Cup.

I have played around with the predictions a bit. If we were to exclude the economic variables and base the predictions only on the past World Cup achievements of countries, then the most likely semi-finalists would still be Germany, the Netherlands, Brazil and Italy or France.

If we were to consider only economic variables and neglect World Cup history, then the semi-finalists would most likely be the Netherlands, the US, England and Switzerland. If we were to consider only economic growth and past World Cup performance – and no per capita GDP – it would again be Germany, Brazil, the Netherlands and Italy in the semi-finals, with France immediately behind.

This model clearly does not have the predictive power of Paul the Octopus, but it is still an economic model and therefore can predict the future with a certain degree of confidence. Or can it?

Argentina is simply doing too well economically to hope to do well in the World Cup, according to this modelling. EPA/Juan Roleri

Applying economics to football

The idea that richer countries should produce better athletes is not new. Countries with higher per capita GDP offer better equipment and infrastructure, a healthier environment and a school system where sport is practised and valued.

In poorer countries, promising young athletes might find it more difficult to stay healthy or to receive good training. The need to make a living might imply that they do not have enough time to devote to football (or to any other sport). Remoteness also makes it less likely for them to be noticed by international talent scouts.

This does not mean that poorer countries have no hope of producing very good football teams. However, it does mean that, on average, a richer country is more likely to produce stronger teams.

But does the fact that the economy is going through a cyclical downturn or upturn influence the performance of a nation’s football team? One can formulate different hypotheses. In a downturn, the success of the national team might be seen by many individuals as a form of liberation from the tough socioeconomic conditions they are facing. In these circumstances, the national team receives more enthusiastic support and encouragement, which in turn could lead to a better performance.

Of course, there are possible counterarguments. For instance, if a recession creates too much attention and expectations around the national team, players might feel the pressure and underperform.

For many, this analysis might be disappointing. After having spent the last few years worrying about recessions, unemployment, stagnation and debt, the World Cup should be an opportunity to free our minds from economics.

But now, when your team goes one-nil down, you should not blame the defensive midfielder’s sloppiness, the goalkeeper’s inadequacy or the coach’s incompetence. No, you should just blame the economic cycle.