'With 1.2 billion people, India's poor show in sports is a puzzle'

Allen Sanderson of University of Chicago works with an unique mix of sports, statistics and economics. In an interview with Vijesh Kamath of Deccan Herald, Prof Sanderson highlights the finer points of economics of sports, its relevance in the Indian context, economic impact of big ticket mega events such as the Olympics, World Cup and a host of other issues.

Prof Sanderson is a senior lecturer in the department of economics at the University of Chicago. He currently teaches a two-quarter sequence in introductory economics, a course on the economics of sport, and has organised a team-taught multi-disciplinary course titled ‘Sport, Society and Science.’ On Wednesday, he will deliver a talk on ‘The Economics of Sport and the University of Chicago’ in Bangalore under the auspices of the University of Chicago Alumni Association and UChicago Alumni Clubs of Bangalore. Excerpts from the interview:

What is economics of sport?

In economics of sport we look at the relation between all aspects of competition, labour market, incentives, strategic decision making (as in games) among others. I tell my students sport is a wonderful laboratory where we need to examine the relations between these fields. Economists are now being consulted whenever there is a proposal to start new sport facilities or before bidding for big sporting events. Today, many universities offer courses on this subject.

 What about the economics of sports in India. Has any analysis been made?
Sports in India is a puzzle to me. It has 1.2 billion people but does so poorly in Olympics. I can pretty well predict how a country will fair in Olympics by putting into an equation two things -- how rich the country is and how many people they have. But one country that does not follow the pattern is India. Given the income and the population, it’s a puzzle why India under performs. At the same time, China is spending a lot of money to get more gold medals in world events, something which Soviet Union and East Germany did three decades ago. It’s good that India has not got into this obsession.

What is the impact of hosting big ticket events like Olympics, World Cup on a country’s economy?

A city hosting such events should look it as a party. It’s fun. Partying for four weeks. It’s like a big Indian wedding. But, anybody who thinks hosting big events could help in economic benefit is mistaken. The question is how much money you are going to lose and who is going is pay for it. Developers are going to benefit, but tax payers are going to lose as taxes go up for funding the events. But that does not mean that we should not be holding these events. We sometimes lose on purpose. We spend a lot on weddings.   

Should India host the Olympics?

I don’t think so. India’s infrastructure is below what the International Olympics Committee would demand. To meet their specifications like the inaugural stadium, olympics village, India is going to lose a lot of money. Even in the US I think only two cities should host the Olympics -- Los Angeles and Boston - as they have lot of existing facilities.

You have worked on the link between economy and happiness. Is there a direct correlation between the two?

Economists have collected data across countries on the income and the happiness parameters. The inference seems to indicate that citizens of rich countries are happier. It is just not the income but the rate of growth of that income. At the same time one should remember that happiness is subjective. China was growing very fast and now it is not as rapid as it used to be and that is making people there unhappy.

Your assessment of the emerging global economic scenario...
2013 is going to be a mess. It doesn’t matter where you are, but its going to be a mess. US will not grow very fast. Europe has still got to decide on the Greece problem, after that it will have to solve the Spanish problem. Both India and China will grow slowly. I do not think that 2013 will be very good year for the economy.

What is your take on the US fiscal cliff?

US is on a pattern of government expenditure that is unsustainable. We are just spending far more money than we are collecting taxes. For every dollar US government spends, it is borrowing 40 cents. The biggest expenditure of the federal government is on security based retirement pension funds and healthcare. Neither the Democrats nor the Republicans want  to cut pensions. But, we will come out of the fiscal cliff as both parties, I think, will soon come to some accommodation in early 2013. The rich could be taxed more, the president can reduce some of his entitlements. But I am a little pessimistic whether they will arrive at a long term solution.  

India has come at the receiving end, especially during the campaigning for the presidential elections in the US, on outsourcing. Your comments.

Outsourcing has become a dirty word. I think it’s just silly. Countries have to look at other countries not as rivals but as partners. We cannot talk about outsourcing in isolation. Outsourcing and insourcing go together. If an American company is spending say one million dollars in India on some production, that million dollar will come back as a demand for other American goods. Besides, countries that trade a lot with each other are very unlikely to get into war with each other. The more integrated India, China, US and other countries become it will help in reducing political tension.