Transcript MBA Finance - Solvay Brussels School

METP - Statistics
World Cup
Elena Arias
Marie-Paule Laurent
Yvik Swan
Solvay Business School
Université Libre de Bruxelles
Fall 2007
Goldman Sachs Report
The World Cup and Economy (2002)
GS Report
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Goldman Sachs Report
The World Cup and Economy (2002)
GS Report
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Goldman Sachs Report
The World Cup and Economy (2002)
• What is the relationship between the economy and the
football result?
• What do you conclude from this graph and from the
regression line?
GS Report
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Goldman Sachs Report
The World Cup and Economy (2002)
• Extract of GS report
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Goldman Sachs Report
The World Cup and Economy (2002)
• Comment 1:
– The presented model tries to explain country wealth by the level of its national
football team. The results seem to show the existence of a positive relationship.
– Underlying economic theory: a good FIFA ranking leads to such passion of the
country’s population that people increase their consumption and/or their
productivity, which implies the growth of national wealth!!!!
– It is more intuitive to reverse the causality link and to consider that the
performance of the football team depends on the average wealth of the
population.
• Comment 2:
– The technique applied to the data: linear regression is applied on the variables
in order to determine the link between them.
– But, it is not because some software draws a straight line through a cloud of
points that the results are automatically sensible.
– Here: the observation of the distribution of the countries in the graph shows a
dual structure with, on the one hand, countries with a high level of wealth
(European Union, United States and Japan) and, on the other hand, other
countries.
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Goldman Sachs Report
The World Cup and Economy (2002)
GS Report
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Goldman Sachs Report
The World Cup and Economy (2002)
• Our own analysis
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Empirical study:
– April 2002 FIFA ranking (www.fifa.com)
– 2000 GDP per capita in USD (www.imf.org).
Objective: Explain the FIFA ranking by the GDP per capita and not the opposite.
Methodology: Separate the countries into two subgroups.
– Group 1 (EU, USA and Japan): better average ranking and negative correlation
between performance and wealth.
In this subgroup, the “poorer” countries are, the better the ranking.
– Group 2 (all others countries): the ranking is lower on average but no clear
structure appears.
The graph presents the average ranking for both groups as well as the estimated
regression line for “rich” countries. The regression line for “poor” countries is not
drawn, as the dependence is not confirmed. The dotted line is the one given in the
Goldman Sachs study.
GS Report
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Goldman Sachs Report
The World Cup and Economy (2002)
• Our own analysis
GS Report
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