The most fascinating column for an economist to write about the World Cup is Teardown, and I had prepared it even before the opening match. The logic is simple: the benefits of hosting are oversold and the costs barely count.
When the tournament last came to the US in 1994, boosters promised $4 billion in profits to the host cities. Economists later reported losses of up to $9.3 billion. FIFA consultants estimated that this World Cup would increase US gross domestic product by $17.2 billion. Receipts are still coming in—card spending has surged; Restaurants and bars have had their best months in years – but it’s the national picture that matters, and there the gains are lost against tourists who stayed home and jobs that never came. Economist Victor Matheson put it bluntly: “The World Cup is making us happier. There’s not much evidence that it’s making us richer.”
Consider what else we can buy. Closing the racial-achievement gap in mathematics could be achieved with a targeted investment of approximately $1,700 per child each year over a three-year period. The intervention increased mathematics achievement by 0.184 standard deviations per year in primary school and by 0.146 in secondary school. Economists estimate that each standard deviation of achievement is equivalent to $110,000 to $230,000 in lifetime earnings, so $10 billion of that gain buys about two million children over three years, an increase of about $200 billion.
But to get to the truth, I have to leave my bubble for the real world. When I was working on public school reform, I sat in on them every week. So I went with my family and friends to a match – Norway vs. Iraq – to watch the traffic and treat myself to overpriced hot dogs.
I got much less traffic than expected. I saw canopies of Iraqi flags, bodies were out of every window, everyone was dancing to a light hip-hop tune. This walk in was a clash of cultures who seemed to enjoy each other. I went looking for one of those ridiculous horned Viking hats and settled for a green Iraqi trucker hat. I wore it and immediately made new friends.
My generation has lived through two American wars with Iraq, but I have never met Iraqis, danced to their music, or heard their anthem. And that distance does something cool and dangerous: It sets the price of our credibility. Tell us tomorrow that Canada is a threat and we will laugh – we know Canada, we have stood there, we can see the faces. Tell us the same about Iraq and it will be easier.
In minute 39, while I was doing the Norwegian Viking row in my Iraqi hat, Iraq scored. This tied the game; Norway would withdraw, and the goal would not appear in any history of the tournament. But this is the most important goal I saw all summer. The man in front of us sank to his knees, threw his hands to the sky and shouted that he never thought he would live to see his country score in the World Cup. Her face was wet and overflowing with happiness. I couldn’t fit the old story before me, and I wondered as an economist shouldn’t wonder: If two peoples could get along like this before their governments told each other, might there be a little more room to work for peace?
Borders don’t break down because a stadium sang in unison, and no treaties were signed that night in Foxboro, Mass. But governments, ultimately, answer to the public – and a public that stands shoulder to shoulder with those it has been taught to fear finds it difficult to go to war.
Years ago, Matthew Jackson and I created a model of how the brain sorts information into categories for cognitive efficiency. We found that prejudice does not require hatred. Divide the people you frequently meet into good categories; The rest is covered in thick blocks. “Iraqi”, to an American who has only met Iraq through two wars, means a rough classification – 40 million people in one or two bins. The treatment is more interactive.
I saw this happening in the World Cup. A stadium takes the coarse block and, for a few hours, forces the finer type that my model said was missing. My wife, who is a proud Austrian, felt it too and asked what it would be like not to see it but to feel it – to stand in a square for your country.
So I dusted off my lederhosen, and we headed to Kansas City, Mo., for Austria vs. Algeria. Traveled to. The Algerians had better music, but the Austrians were more committed – a bunch of my wife’s countrymen chanted “I’m from Austria” at full voice for hours. Austria and Algeria are separated by language, religion, history, and the Mediterranean Sea. None of it mattered.
Still, I did what a social scientist does—I went to barbecue joints to ask my questions. Was the traffic heavier than usual? Was the pit master busier than a normal Saturday? Did they find us outsiders troublesome? The guy standing in line ahead of me at Slapp’s BBQ, a former professional barbecue judge, ignored all this and instead told me he was proud that the world finally saw Kansas City — that they’re not flyover country, that the people here are kind and well-educated. He was not answering my question; He was doing it right. Then he sent me home with two bottles of his favorite sauces – one spicy, one sweet.
Multiply that man by a stadium, then each stadium, over 39 days, and you’ll begin to see that normal economic analysis was never meant to count. The cost of America’s two decades in Iraq and the War on Terror was between $2 trillion and $8 trillion, depending on who is counting. If everything we’ve seen reduces the probability of such a war to 0.2%, then FIFA’s $17.2 billion is a small number.
I can’t estimate how much a tournament increases the chances of war, but the evidence is at least suggestive. Emilio Depétris-Chauvin and his co-authors found that Africans surveyed right after a national-team victory felt less identified by the ethnic group and more trusting of other ethnicities – and countries that were barely qualifying for the Cup of Nations, saw about 9% fewer civil-conflict episodes in the months following. Two-tenths of a percent is an integer error on an integer error, and I wouldn’t bet against a stadium full of Iraqis and Norwegians sorting each other out more closely to clear it up.
I went to my first World Cup to find out its value – to see if the benefits were oversold. they are. But he measures the wrong thing. The real return is not in hotel stays or pounds of ribs sold; It was 90 minutes when 40 million Iraqis were reduced to one – one man crying over a goal that meant nothing and was everything.
No one can put that into a spreadsheet. We watched each other in high resolution for a few hours.
Mr. Fryer is a journal contributor, an economics professor at Harvard, the founder of Equal Opportunity Ventures and a senior fellow at the Manhattan Institute.