By Andrew Smith, Chief Economist
Economists are not having much luck at forecasting the economy – can we do any better with the Olympics?

Here goes:

Predicting British sporting success is subject to a great deal of uncertainty and – often – disappointment. But for the Olympics, the value of athlete funding and a host country ‘bounce’ appear to have been significant factors in influencing past results and would seem a good place to start.

In Beijing, Great Britain won 47 medals, 19 of which were gold. Analysing funding data, it is possible to estimate a ‘cost’ per medal. Taking the ‘cost’, and after adjusting for inflation, it is plausible to divide the amount of funding this time by the ‘cost’ to yield a medal prediction. Stage one complete.

But as well as funding, the host country effect is important. In past Olympics, home advantage has resulted in substantially more medals being won by that country than in the games immediately prior to hosting – on occasions this ‘bounce’ has exceeded 50%. Incorporating the ‘bounce’ (despite LOCOG’s best efforts to neutralise it!) our model speculates (hesitantly) that Team GB will collect 61 medals, 30 of which will be gold! This should comfortably place us third in the overall table.

Such a large haul is certainly towards the bullish end of projections – UK Sport, the funding body for elite athletes, has targeted a minimum of just 48 medals – and normally I am accused of undue pessimism!

Sadly, none of the ‘bounce’ will be down to me – I am leaving London to holiday in Whitstable. Enjoy the games.