Mega-Events, Minimal Returns: The High Cost of Hosting Global Spectacles

By Mohamed Moutii of AIER. Excerpts:

"The economic case for hosting mega-events relies heavily on impact studies predicting large multiplier effects. Organizers argue that visitor spending will ripple through the local economy, boosting tourism, creating jobs, and generating lasting growth. In practice, however, these projections rarely materialize. 

Since 1960, every Olympic Games has gone over its initial budget — a pattern revealing a systemic underestimation of costs. A University of Oxford study found that all 23 host cities examined exceeded their budgets, with Rio and Tokyo experiencing significant overruns of 352 percent and 128 percent, respectively. Thirteen cities faced cost overruns exceeding 100 percent of planned spending.

These overruns are worsened by poor financial returns. The London 2012 Games cost about $14.6 billion but brought in only $5.2 billion; Beijing 2008 cost roughly $42 billion while earning just $3.6 billion; and Tokyo 2020 about $13 billion in costs generated just $5.8 billion. As economists Robert Baade and Victor Matheson have shown, Olympic benefits are consistently overstated while costs are systematically underestimated.

The World Cup follows a similar pattern. FIFA regularly promotes large economic gains — projecting roughly $40 billion in impact for the 2026 tournament in North America — but historical results suggest otherwise. Twelve of the last 14 World Cups since 1966 have resulted in financial losses for host countries.

Recent tournaments highlight the gap between costs and returns. Brazil spent $15 billion to host the 2014 tournament, yet it generated only about $3 billion from visitor spending. Russia invested over $11 billion for the 2018 World Cup, but visitor spending reached just about $1.5 billion. Qatar’s 2022 World Cup cost an estimated $220 billion, making it the most expensive in history, yet tourism and event-related spending brought in only about $2.3–4.1 billion.

Beyond these financial shortfalls, these events often leave behind “white elephants” — costly facilities with little long-term use. For example, Beijing’s Bird’s Nest stadium costs an estimated $10 million a year for maintenance, while Montreal took until 2006 to pay off its 1976 Olympic debt after nearly bankrupting the city. Athens’ 2004 Olympic facilities now stand abandoned, contributing to Greece’s debt crisis, and Rio de Janeiro’s 2016 Games left Brazil with crumbling infrastructure and mounting debt. These outcomes underscore a persistent reality: mega-event investments rarely deliver lasting economic value, but often impose long-term financial burdens.

Despite their disappointing track record, mega-events continue to be promoted through optimistic studies that often rely on unrealistic assumptions. These projections frequently overlook the crowding-out effect, in which regular tourists and locals avoid host cities due to congestion and higher prices, thereby reducing overall economic gains. They also ignore revenue leakage, as much of the income flows to international governing bodies rather than remaining in local economies.

Consequently, the economic benefits are often greatly overstated. Evidence from past events illustrates this gap: the 2002 Salt Lake City Olympics created only about 7,000 temporary jobs — just 10 percent of projections — and during the 2012 London Olympics, only 10 percent of the 48,000 temporary jobs went to the unemployed. In Salt Lake City, general retailers even lost $167 million, despite tourism-related businesses earning $70 million during the event. These outcomes demonstrate that the expected economic gains often fail to materialize.

Hidden costs further weaken the economic argument for hosting these events. Stadium construction and upgrades have traditionally been among the costliest aspects of mega-event planning, often totaling billions and leaving venues that struggle to generate revenue after the event ends. Even when new stadiums are unnecessary, operational costs — like policing, transportation services, emergency services, and fan zones — can impose a heavy financial burden on city budgets.

The preparations for the 2026 FIFA World Cup already highlight these issues. US host cities have requested $625 million in federal aid for security, but they might still face $100–200 million each for stadium upgrades, policing, transportation, and public services — while mandated fan festivals alone can cost up to $1 million per day. According to The Independent, host cities are collectively facing at least $250 million in shortfalls, which has led major cities to recently reduce or cancel large fan festivals due to rising costs, security concerns, and stalled federal funding. 

Meanwhile, FIFA controls the tournament’s most profitable revenue streams — broadcasting rights, global sponsorships, ticket sales, and in-stadium advertising — leaving cities to cover much of the costs while earning only a small share of the financial gains." 

Medical wait times cost Canadian patients over $4.2 billion in lost wages and productivity last year

By Mackenzie Moir of The Fraser Institute.

The Private Cost of Public Queues for Medically Necessary Care, 2026

• One measure of the privately borne cost of wait times is the value of time that is lost while waiting for treatment.
• Valuing only hours lost during the average work week, the estimated cost of waiting for care in Canada for patients who were in the queue in 2025 was over $4.2 billion. This works out to an average of about $3,043 for each of the estimated 1,386,286 Canadians waiting for treatment in 2025.
• This is a conservative estimate that places no intrinsic value on the time individuals spend waiting in a reduced capacity outside of the work week. Valuing all hours of the week, including evenings and weekends but excluding eight hours of sleep per night, would increase the estimated cost of waiting to $12.9 billion, or about $9,336 per person.
• This estimate only counts costs that are borne by the individual waiting for treatment. The costs of care provided by family members (the time spent caring for the individual waiting for treatment) and their lost productivity due to difficulty or mental anguish are not valued in this estimate. Moreover, non-monetary medical costs, such as increased risk of mortality or adverse events that result directly from long delays for treatment, are not included in this estimate.

Taxing Medicines Is Bad Medicine

By Michael F. Cannon.

"President Trump has announced he will impose a 100 percent tax (tariff) on imports of both on-patent medicines and active ingredients for domestic production of such medicines. He will lower the tax rate to 20 percent if the manufacturer presents the administration with a plan to relocate the manufacturing to the United States. He will further knock the tax rate down to 0 percent if the manufacturer also submits to the president’s price controls.

The president has determined that the patented medicines and the active pharmaceutical ingredients that go into the domestic production of on-patent medicines “are being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security.” A foreign spy is a threat to national security. The medicine that cured your kid is not. 

This tax scheme will make US citizens poorer and make critical medicines—for “cancer, rare diseases, autoimmune disorders, infectious diseases, and other critical health challenges”—more expensive and scarce. It will raise prices on many of the 53 percent of on-patent drugs that US buyers purchase from abroad and raise prices for many of the rest by increasing input prices. 

The new taxes will increase prices for insulins, statins (e.g., Atorvastatin, the single most frequently prescribed drug in the United States), some second-generation antihistamines, pain-relieving opioids, pseudoephedrine, monoclonal antibodies (which treat cancer, autoimmune disorders, and other diseases), and antidepressants. The last time the federal government imposed unnecessary restrictions on non-sedating second-generation antihistamines, those restrictions caused airplanes to fall from the sky. 

If producing these drugs and inputs domestically could deliver the same or greater quantity and/​or at the same or lower cost, manufacturers would already be doing so. The fact that the president must force them to do it indicates that domestic production will be costlier and will make these medicines more expensive and scarce. Even where manufacturers fully comply and avoid the administration’s explicit taxes, consumers will still pay a hidden tax in the form of higher prices for medicines and health insurance."

Every President Tries It. It Never Works. (to increase manufacturing jobs)

By Jason Furman. Excerpts:

"In a full accounting, during the first full month of his second term, the United States lost 2,000 manufacturing jobs. Losses continued almost every month, totaling 100,000 manufacturing jobs since January 2025."

"In his 2024 State of the Union address, President Joe Biden declared, “We’ve got 800,000 new manufacturing jobs in America and counting.” The next morning the Bureau of Labor Statistics announced that the economy had lost 4,000 manufacturing jobs the previous month. More losses followed, in almost every subsequent month of Mr. Biden’s presidency, totaling 202,000 in his last year. The 800,000 new jobs he exulted in were not the beginning of a sustained recovery of manufacturing but rather the return of some of the 1.4 million positions lost during the Covid pandemic."

"Reversing the loss of manufacturing jobs is extremely hard — and not necessarily desirable."

"Manufacturing job share has been dwindling in nearly all middle- and high-income countries. By one analysis, China lost more than 30 million of those jobs from 2011 to 2020, more than twice as many as the number of jobs that exist in the entire U.S. manufacturing sector. Yet total employment continued to grow"

"Manufacturing output, meanwhile, has risen, because workers now produce far more per hour using better and more sophisticated equipment. Today a given number of autoworkers can make, according to my calculations, three times as many cars in a year as they could 50 years ago.

The problem is that consumers do not want three times as many cars. Even as people get richer, they increase their spending on manufactured goods only modestly, preferring instead to spend more on services like travel, health care and dining out. There are only so many cars a family can own, but that’s not the case for expensive vacations or fancy meals. As a result we have fewer people working in auto factories and more people working in luxury resorts and the like.

These forces — rising productivity but steady demand — explain why the United States was losing manufacturing job share as far back as the 1950s and 1960s, long before trade became a major factor. The downward trend changed little after the U.S. entered NAFTA in 1994 or granted permanent normal trade relations to China in 2000. Economists continue to debate the magnitude of the “China shock,” but though it hit some regions harder than others, much of the research suggests that overall, it was responsible for a small fraction of the total manufacturing jobs lost since then."

 

"When governments try to reverse the trend, they mostly succeed only in shifting jobs from one industry to another rather than expanding manufacturing overall. Tariffs on steel, for example, may protect jobs in steel production, but they cost jobs in downstream industries such as automobiles by raising costs and undermining global competitiveness.

Subsidies for targeted industries — Mr. Biden’s preferred approach, particularly for microchips and green energy — have similar trade-offs. They help the favored industries but they also drive up construction and equipment costs across the board, making it harder for companies in other arenas to compete. So instead of creating more jobs overall, the subsidized industries just crowd out unsubsidized ones.

Efforts to revive manufacturing are rooted in nostalgia. Once upon a time, manufacturing jobs provided a reliable pathway to the middle class, offering a wage premium to workers without a college degree. In 1970, roughly 80 percent of manufacturing workers had no more than a high school education. Today that figure is closer to 40 percent.

Manufacturing jobs also used to pay more than nonmanufacturing jobs with similar skill requirements. Not anymore: Today people in nonmanagerial manufacturing jobs average $30 an hour as compared with $32 for truck drivers, $33 for wholesale trade workers and $38 for construction workers. Trying to push more people into manufacturing jobs is therefore more likely to harm the middle class than help it."

Related post:

The manufacturing delusion? (2023) This has an article by Christina Romer that makes points similar to Furman's

Access to federal student loans can reduce welfare for some young adults

See Optimism about Graduation and College Financial Aid by Emily G. Moschini, Gajendran Raveendranathan & Ming Xu.

American Economic Journal: Macroeconomics

vol. 18, no. 2, April 2026

(pp. 148–87)

Abstract

"In the United States, college dropout risk is sizable. We provide new empirical evidence that beliefs about the likelihood of earning a bachelor's degree predict college enrollment, and that the distribution of these beliefs exhibits widespread optimism. We incorporate this distribution of beliefs into an overlapping generations model with college as a risky investment that can be financed via federal loans, grants, family transfers, or earnings. We then examine the welfare impact of access to federal student loans. We find that access can reduce welfare for young adults who are low-skilled, poor, and optimistic, due to their mistaken beliefs."  

 

The Economics of Oil Prices

David R Henderson. Excerpt:

"The World Market

While I was waiting to play pickleball a couple of weeks ago, a friend who knows I’m an economist asked me a question: “Given that we in America produce almost all the oil we use, why does a reduction in supply of other countries’ oil lead to a price increase here?”

I loved the question because I occasionally raised exactly this question when I taught at the Naval Postgraduate School.

Here’s how I answered.

Because of low transportation costs per barrel of oil, which are a small fraction of the price of a barrel of oil, the market for oil is global. A reduction in the supply of oil anywhere in the world reduces world supply. For a given world demand, therefore, the price oil will increase everywhere.

My friend thought for a minute. He seemed to get it.

Then the next question occurred to him. “What,” he asked, “if a domestic refiner is sitting on a large inventory of oil that it had bought weeks earlier for over $20 less than the current price? How can it justify pricing its refined products as if it had paid the current higher price of oil?”

I sensed a certain upset at gasoline companies and so I decided to take an indirect route to answer. I was pretty sure this guy, who is close to my age, had lived in the area a long time. I asked him if he owned a house. He said he did. I asked him if his house is worth a lot more than what he paid for it. He said it is. Then I asked, “If you decided to sell your house, would you price it at what you paid for it or would you price it according to current market conditions, which would imply a much higher price?” He answered that he would price to the market.

He got it.

By the way, when I wrote my Wall Street Journal piece in August 1990 arguing that you couldn’t justify war in the Middle East based on Saddam Hussein’s probable impact on the price of crude oil, I of course put no consideration on how much oil we got from Iraq or Kuwait—it was a small amount but the amount was irrelevant. Remember that it’s a world market."

Recent papers make airtight case against socialist growth

By Justin Callais. He the Chief Economist with the Archbridge Institute. Excerpts:

"Recent work by JP Bastos, Jamie Bologna Pavlik, and Vincent Geloso shows that Cuba severely underperforms “synthetic Cuba,” or what Cuba’s growth trajectory would have been if not for the socialist policies post-Revolution. Notably, they conduct their analysis based on reported GDP per capita numbers, adjusted (to account for fabricated data) GDP per capita, and adjusted for aid from the Soviet Union."

"Using the corrected data, Cuban GDP per capita was 48.3% below the synthetic counterfactual by 1972, and 44.3% below by 1989. When Soviet subsidies are stripped out, the picture is even grimmer: by 1972, Cuba’s GDP per capita fell 55.5% below the counterfactual, with that gap persisting through 1989.

Is this really just the US’s fault because of embargos? The authors account for this with specifications that are generous to inflate the embargo’s damage. Even so, the verdict is clear: the embargo can account for at most 8% to 10% of the difference between Cuba’s actual GDP and the counterfactual, a trivial share of the Revolution’s total effect."

"Before the Revolution, Cuba (much like Venezuela, which is covered in another great paper by Kevin Grier and Norman Maynard) was one of the wealthiest countries in Latin America. In just four years after the Revolution, Cuba returned to roughly the same living standards it had in 1937, effectively erasing more than two decades of economic growth."

"Louis Rouanet studies the impact of François Mitterrand’s 1981 election, who ran on a platform of “rupture with capitalism.” The findings are drastic: by 1996, France’s GDP per capita was roughly 26% lower than that of the synthetic counterfactual, a gap of about $7,300 in constant 2017 dollars. Investment collapsed relative to the counterfactual, and the employment rate underperformed by more than two percentage points."

"Even though Mitterrand somewhat reversed course after 1983, Rouanet argues that the policies persisted. The policies that expanded welfare spending, created hundreds of thousands of public sector jobs, and restructured the labor market were not reversed, and they locked in institutional arrangements that outlasted the President himself. France’s centralized, bureaucracy-dominated politics made bad policies stickier than they would have been elsewhere.

It is important to note that this wasn’t the type of social democracy (large welfare state complemented with a market economy) that exists in Scandinavia. The French Socialist Party in 1981 openly declared its goal to be the “socialization of the means of investment, production, and exchange.”"

"The broadest of the three, this paper by Andreas Bergh, Christian Bjørnskov, and Luděk Kouba, asks the question most directly: what does socialism do to economic growth, across countries and time? The authors draw on a dataset covering 192 sovereign countries from 1950 to 2020 and focus on the 22 countries that made a decisive transition to socialist planned economies after independence, countries like Tanzania, Zambia, Vietnam, Sudan, and Venezuela.

They use neighbor comparisons (China vs. Taiwan, Czechoslovakia vs. Austria, Yugoslavia vs. Greece) as a first cut, then apply more formal panel methods. The neighbor comparisons are striking:

Taiwan’s annual growth rate between 1950 and 1990 was on average 2.7 percentage points higher than China’s, Austria’s was 1.6 percentage points higher than Czechoslovakia’s, and Greece’s was .7 percentage points higher than Yugoslavia’s despite Greek instability, coups and a period of military dictatorship.

The results are consistent across every specification: adopting socialism is associated with a decline in annual growth rates of approximately two percentage points during the first decade after implementation. That sounds modest, but compound it over decades and it’s the difference between prosperity and stagnation. Let’s make a simple comparison. Assume two countries both have GDP per capita of $10,000. One goes socialist and grows at 2 percentage points less than the non-socialist country (assume 1% versus 3%). After 10 years, the socialist country has a GDP per capita of $11,046; the non-socialist one has GDP per capita of $13,439. After 20 years? Just $12,202 versus $18,061, a nearly $6,000 per capita difference!"