Billions of viewers, tourists flocking in, the hustle and bustle of a country preparing for the single largest tournament ever known. The FIFA World Cup provides everything needed to substantially boost an economy, and yet nearly every time, the profit that is to be gained from hosting is severely overestimated. Why is this?

The first factor to consider is infrastructure costs, with host nations investing so much into constructing stadiums to meet FIFA requirements. Many believe that the surge in employment from the stadium construction will boost the economy, but this is a misconception, known as the Broken Window Fallacy, first introduced by economist Frederick Bastiat. Imagine you were a store owner, whose glass window has just been broken. It’s easy to see how the money spent towards employing a glassworker would boost the economy through job creation, however this is where the fallacy lies. The reality is that employing the glassworker now depletes the shop owner of money that could have been spent on an equally economy boosting purchase. In our case, we cannot reliably prove that jobs created from stadium construction does more for the economy than investing in other long term projects such as roads or bridges. This is one of the reasons why hosting the World Cup often seems like a better deal than it really is.
Another key factor that leads to overestimating economic benefits for host nations is how they calculate with gross spending as opposed to net spending. Essentially, much of the spending done during the World Cup replaces, rather than adding, to normal consumer activity.
Economists refer to this as Crowding Out, which describes how one type of spending works to reduce another. Often taking place during the summer, many tourists would be visiting anyways, but the chaos of the World Cup often dissuades travelers from entering the country during the tournament's duration. So while we add new spenders to the equation, we also have to subtract the spenders that got dissuaded.
Hosting the World Cup might sound like an economic dream, but it often acts more as an illusion than an opportunity. From infrastructure costs to consumer spending habits, overestimation when calculating profits runs deep. While it’s important to note that this piece barely scratches the surface of a complex subject, it gives a strong insight on some of the misconceptions of hosting the FIFA World Cup.











Work Cited:


Jacobsen, Peter. “Why Hosting World Cup Soccer Games Is No Economic Score for Cities” Foundation for Economic Education, https://fee.org/articles/why-hosting-world-cup-soccer-games-is-no-economic-score-for-cities/?gad_source=1&gad_campaignid=21607921915&gbraid=0AAAAADkIVmfApz-4x0HaMK-VknJ-Ss0N7&gclid=Cj0KCQjw3aLHBhDTARIsAIRij58QLK2UBu0b3bZe2x-CBkB1ZxaCAwTdqJkaXy7PwtKMmZZI0nCPjZYaAi4CEALw_wcB

Matheson, Victor, "The Economics of the World Cup" (2018). Economics Department Working Papers. Paper 180.
https://crossworks.holycross.edu/econ_working_papers/180


Allmers, Swantje, and Wolfgang Maennig. “Economic Impacts of the FIFA Soccer World Cups in France 1998, Germany 2006, and Outlook for South Africa 2010.” Eastern Economic Journal, vol. 35, no. 4, 2009, pp. 500–19. JSTOR
http://www.jstor.org/stable/40326165.