Illuminating the World Cup effect: Night lights evidence from South Africa

Abstract

This paper evaluates the economic impact of the $14 billion preparatory infrastructure investments for the 2010 FIFA World Cup in South Africa. We use satellite data on night light luminosity at municipality and electoral district level as a proxy for economic activity, applying synthetic control methods for estimation. For the average World Cup municipality, we find significantly positive, short-run effects before the tournament, corresponding to a reduction of unemployment by 1.3 percentage points. At the electoral district level, we reveal distinct effect heterogeneity, where especially investments in transport infrastructure are shown to have long-lasting, positive effects, particularly in rural areas.

The causal economic effects of Olympic Games on host regions

“…The related literature typically does not find significant local or regional effects of events and sports facilities for other large one-shot events such as FIFA World Cups (Baade and Matheson, 2004;Pfeifer et al, 2018), annually recurring events such as Formula 1 (Storm et al, 2019), or professional league sports (Siegfried and Zimbalist, 2000;Coates and Humphreys, 2003). Pfeifer et al (2018) evaluate the infrastructure investment for the 2010 FIFA World Cup in South Africa at a highly disaggregated spatial scale using satellite images. They find large and persistent positive effects on employment and positive economic net benefits originating from investment in transportation infrastructure, especially in small, less populous and less developed locations.…”

“…Similarly, for Britain Gibbons et al (2019) find that a 10% increase in accessibility causally increases local employment by 3%-5%. Therefore, as highlighted by Pfeifer et al (2018), directly upgrading the general infrastructure and amenities of a city or region rather than taking the costly detour of additionally building large sports facilities with little subsequent economic benefits (Siegfried and Zimbalist, 2000;Coates and Humphreys, 2008), is likely to be a more efficient use of public resources. 22…”

Short-term hotel room price effects of sporting events

“…More recently, two studies use synthetic control function approach to analyse the effects of mega events. Pfeifer et al (2018) analyse the effects of the South African World Cup, while Wan and Song (2019) investigate the effects of the London Olympic Games, Brazil World Cup and Rio de Janeiro Olympic Games on economic growth. Kontokosta (2012) employs a variant of a DID method to examine the impact of the Olympic Games on property prices.…”

The economic impact of city–county consolidations: a synthetic control approach

“…This effect would violate the SCM assumption that the shock only affects the treated region. Thus, following Pfeifer et al (2016) who drop from the donor pool municipalities directly adjacent to their treated regions, in addition to our main results, we also perform an analysis with counties adjacent to the consolidated counties dropped from the donor pool. The results are similar and available upon request.…”