Costs and Benefits London Olympics 2012

london olympic logo

Readers Question: What are the costs and benefits of the London 2012 Olympics?

A cost benefit analysis seeks to examine all the various costs and benefits. These include both the monetary costs and benefits and the non monetary costs and benefits.

Costs of London Olympics

  1. Financial cost of building facilities, which may only be used to their full potential for a short time during games.
  2. The investment is short term. Many facilities can only be used for the 3 week duration of the Olympics. After that there is a danger of ‘white elephant projects’ – facilities that can not be effectively reused. E.g. similar to the Millennium Dome.
  3. Opportunity cost. It is estimated the cost of the Olympic village could cost up to £1billion. This is £1billion that cannot be spent on alternative investment schemes like transport and education in London.
  4. The credit crunch means private sector investment has dried up. This increases the cost onto the tax payers. Government spending is already under strain because of the bank bailouts and recession.
  5. If taxpayer has to step in, the Olympics will lose part of its £2.2bn contingency fund
  6. The London Olympic logo is truly awful, and according to the Sun newspaper could trigger epilepsy.

london olympics

Benefits of London Olympics.

  1. Provides Jobs and Economic Activity. Important in times of a recession, when the private construction sector is in a steep decline. The government spending can be seen as part of an expansionary fiscal policy.
  2. Hosting Olympics boosts the prestige of a country. It is a ‘once in a lifetime’ opportunity to provide a showcase to the world. Not everything can be reduced to simple accounts. (good example of a non monetary benefits)
  3. Hosting Olympics will provide a boost to tourism and travel to London, during the Olympics and hopefully after.
  4. Building Olympic park has helped to regenerate the East end of London. Increases civic pride.
  5. There is a lasting legacy of the Olympics. East London has new rail lines (Dockland light railway extension) and improved public transport, including improved international rail station at Stratford.. This helps to reduce congestion and increase productivity.
  6. Many of the venues will be used after the event, e.g. Olympic stadium will remain an athletic track, but also will be used by West Ham F.C. Other venues like the velodrome provide a much needed international standard track in the capital.
  7. After the games, the Olympic park will partly give way to a legacy of more available homes, to help ease London housing shortage.
  8. Encourages sport in the UK, might make the UK have better fitness standards and less obese reducing demand on health care.
  9. The Olympic Parkland has been created to leave a legacy for wildlife and the environment in the available area.


Personally, I’m glad we are hosting the Olympics. Yes, it might end up costing the taxpayer a lot. But, £1bn is less than 0.1% of total GDP. It’s a once in a lifetime opportunity to host the most important sporting event on the calendar. The Olympics may well make an economic loss in the short term, but does everything have to be ruled by profit maximising decisions? People will say it’s better to spend the money on health care and education. I don’t doubt these are higher priorities. But, we spend over £80bn on health care every year. I don’t see why we can’t spend £1bn on promoting the Olympics as a one off event. (which might actually encourage people to be fit and therefore need less health care)

Let’s enjoy and take pride in the London Olympics.


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