Who Will Win the 2014 World Cup? Econometrics Can Tell Us
In a post about the Olympics this past winter, we mentioned research linking the economic development of a country to its chances of taking home a large number medals in the Games. While it might seem reasonable to extend this logic to the World Cup, in-depth econometric and statistical analysis indicates otherwise. So how can we best predict who will come out on top in this year’s World Cup?
According to the “PwC World Cup Index,” key factors predicting a top spot in the championship include the number of professional players in a given country, national interest in the sport, long-term tradition and the recent standing of the team. Yet, the relative weight of each of these and other variables is not always easy to quantify. Moreover, there are other factors, including home team, and even home continent advantage, that are thrown into the mix.
Alongside the PwC report, a number of other organizations have delved into the prediction game, including Deutsche Bank and The Economist. For the fifth World Cup in a row, Goldman Sachs also produced a lengthy statistical analysis. Their report, “The World Cup and Economics 2014” uses a stochastic model to create predictions for each of the 64 potential matches that could be played, thereby creating a probable ranking of each team.
Each report draws on historical and contemporary data to create their models, leading to the same conclusion – injury and error aside, Brazil should prove victorious. The PwC report highlights the fact that odds are consistently in favor of European and South American teams, though no European team has ever won when South America was hosting the World Cup, and Brazil is the only South American team ever to have won in Europe (in Sweden in 1958).
Interestingly, both the U.S. and England are what they call “perennial underachievers,” as their overall rankings should have led to far more World Cup wins than history has shown. This year is unlikely to buck this negative trend, however, as neither team is predicted to advance beyond the first round.
Yet, as the Goldman Sachs report points out, these models do not account for injury, illness or other unpredictable factors. So while econometrics tells us that the final game will pit Argentina against Brazil, perhaps a fluke accident or a few bad passes will allow other teams to sweep in and compete for the number one spot.
If you find yourself stumbling over the basic rules of the game, much less the econometrics of who might win, take a look at this article on the 10 things you need to know in order to understand the World Cup. Like the Olympics, the World Cup offers both die-hard fans and novice viewers a chance to come together and enjoy watching. So read up and enjoy the fun!
Photo credit: Moazzam Brohi