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Were the London Olympics an Economically Rational Decision?

In: Social Issues

Submitted By Morrisr1994
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London 2012, a rational economic decision?

When looking at whether or not hosting the Olympics was a rational economic decision, this can be related to the basic economic problem whereby we have infinite wants but only finite resources. By choosing to host the London Olympics we would have to cut our spending on other sectors of the economy as large amounts of money would needed to be invested, estimated to be £9.9bn.

To decide whether it was a good decision to host them we need to know what the next best thing we could have done with the money is, the opportunity cost. With the estimated cost of the Olympics being £.9.9bn, there is a considerable amount of other things that the money could have been spent on. For example, we could have purchased roughly 120 Cristiano Ronaldo’s which might have resulted in us actually winning a football tournament. An issue which has come up in the news a lot recently has been the shortage of helicopters in Iraq, instead of hosting the Olympics we could have purchased 440 new chinook helicopters. Alternatively, we could have funded the country’s A&E’s hospitals for 5 years, many may argue this may have been more helpful to the country than hosting the Olympics.

However there are many benefits to hosting the Olympics. For example, massive amounts of money will be being put into the economy via tourists and this will lead to an increase in economic growth. The building of the stadiums for the Olympics will also lead to many more jobs being available to people, the stadiums could also be rented out to premier league football clubs to help increase their cash flow by allowing them to play at bigger stadiums, and thus increasing the amount of ticket sales they would obtain. Perhaps the short term effects of hosting the Olympics may not be so beneficial to the economy, however in the long run, they massive increase in spending during the Olympics would lead to an increase in economic growth which the country so desperately needs.

Hosting the Olympics also brings the country together in a time of hardship, and this is an element which can’t really have a value put upon it however it is extremely vital for the country to have a “feel good” factor about it and the Olympics will only boost national pride and unity. The Olympics also provides an inspiration for children to take part in sport, and with rising obesity among children and the amount of sport taking part in schools rapidly decreasing, this can only be seen as a good thing. The government is also planning to build ‘Olympic villages’ for the athletes and for the tourists coming to watch the games, not only will this provide more jobs for people in the area, but the government have also promised to use the properties as low-cost households for people looking to move into the area after the Olympics.

So in conclusion, whilst it is unlikely that we will make a direct profit from hosting the Olympics, the long term benefits such as an increase in infrastructure and economic growth will mean that they will be well worth the initial set backs, and the Olympics will have been a rational economic decision to host.

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