Hungary's Olympic performance - Portfolio Analysis

by István Madár

As we know, Hungary placed 12th in the Olympic medal table, and an economic-based prediction did hit the bull's eye by foreseeing the 15 medals won in total. Without focusing on performance exclusively, let's toy with the question: how much do the results of the Rio games confirm the economic-based approach? (We published a similar study in 2012.)

How inevitable it is that a country with Hungary's economy would perform so well in the Olympics? Looking at the graph below, we see that the top positions are held by countries with big populations and strong economies.

Of course, it is entirely logical that larger populations churn out more talents on a statistical basis, which is why big countries enjoy an advantage at the games. However, five out of the ten most populous countries of the world (India, Indonesia, Pakistan, Nigeria and Mexico) only won 11 medals, with a single gold among them, at this year's games, so saying that population in itself is not a good predictor for good performance is an understatement.

The next figure shows how many people it takes to "produce" a single Olympic medal. There are huge differences among countries here, even at the top of the list. Grenada's sole silver medal is shared by 107,000 citizens. In the second-placed United Kingdom, this number is close to a million. In China, 20 million people share a single Olympic medal, with an efficiency that would see Hungary win just half a medal.

It is worth noting that this efficiency is not exclusive to Hungary among similar countries, as Slovenia and Croatia both have more medals per population, and even Lithuania is close to Hungary in this respect. Eight countries of the CEE region placed in the top 30 of this list, so the region is a good producer of Olympic medals in general.

As we saw above, the efficiency with which each country organizes its sports with regard to finding Olympic champion material varies hugely. It is most certainly tied to how developed a country is in general, so richer countries presumably deliver more medals. The figure below confirms the assumption, with a few notable exceptions.

Developed countries are of course much bigger hoarders of medals compared to poor ones, but we find several rich countries that performed poorly at the Olympics. (Most of these are in the Arab world, but Finland or Austria will also find it hard to explain the poor performance with their per-capita GDP.) At the other end of the scale, the fine showing of North Korea is probably not based on economic factors. As one North Korean housewife put it following her country's success: "It filled me with joy to see our flag rise after the victories. Our athletes trained very hard to please our Marshal."

To see how being developed in itself is not a strong predictor of success, please consult the chart below. In the left panel, it shows medals won by countries with comparable level of development to Hungary; in the right, we charted population per medal. Hungary has placed notably well in both.

This means that while population and development are important factors, there are certainly further components behind success at the games, Individual countries vary greatly with regard to the culture of sports, the system of institutions, or the priority of resource allocation. It is no accident that economic models to predict Olympic medals try to account for these factors as well, most simply by using the results of previous Olympic Games to see how much an individual country under- or overperforms in general compared to its population and level of development.

Just for fun, we counted up the medals won by members of the European Union, as well as those won by ex-Soviet states, which also shows some of the above differences. The EU was by far the most successful region, followed by the former Soviet Union, even though Russia's performance was hugely affected by the doping scandal. (The EU has a population of 508 million, the "Soviet" area 293 million, the US 324 million and China 1.382 billion.)

Those reading carefully may have discovered an inconsistency between two of the above statements. On the one hand, we began by declaring that the top of the medal table is occupied by rich countries with large populations, but then we showed that population and development in themselves are not strong predictors of Olympic success. However, the two taken together are very much predictive of success. Economic power closely correlates with success at the Olympics, as shown below.

The chart also shows that Hungary did outperform both its population and its per-capita GDP at the Rio games, but this performance was not unique as we see several countries significantly above the trend line.

So we can see that Hungary's illustrious placing in the Olympic medal table originates in part from its population, partly from its development level, and partly from the traditional overperforming of CEE countries. There is one more simple reason, though: while we have been looking at all medals, the official ranking prioritizes gold medals. More than half of Hungarian medals were gold at the games this time, which deviates strongly from the typical medal distribution of major medal winners. Only Jamaica can boast more gold per all medals than Hungary.

This means that the methodology favored Hungary in Rio, just as it had in London. Six countries ranked behind us have won more medals in total but finished behind Hungary on less gold medals.

All this detracts nothing from the success that Hungary has again reinforced its position among the top sport nations of the globe, for which we congratulate the entire Hungarian Olympic delegation.

• Tags:
• economy,
• sports