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. The 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 taxpayers. Government spending is already under strain because of the bank bailouts and recession.
  5. If the 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 for 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.


15 thoughts on “Costs and Benefits London Olympics 2012”

  1. A wonderful Economic theory. HATSOFF.

    True, this kind of an occasion comes once in life time, so a short -term loss might not be heavy to the tax-payers CAUSE IT’S A NATION’S PRIDE.

  2. what benefit will the olympics be for the rest of the country,for example. cumbria,newcastle and north east.yorkshire.what infrastructurers are being built like they are in london in these areas.none thats how many.the uk is not a big country so why was’nt it spread out throughout the uk so more of the country benefitted and not just wonder people in the north now call this the “cockney olympics”

  3. yes i really think it would be benefical, as it would Encourage sport in the UK, also make the UK have better fitness standards and less obese reducing demand on health care, so less money is spent on that which means more money is saved.

  4. I think they would have been better spending the £3.3 billion on improving the NHS or education which are both pretty screwed. I’m sure that people would rather a reliable efficient health system over a 3 weeks sporting event that doesn’t benefit them in anyway and to make matters worse which they have to pay for! This nation lost its pride along time ago the last thing it needs when it is 700 billion in debt and in the middle of a financial crisis is the olympic games. I suppose look at the upside though at least the french didn’t get it ha ha ha ha

  5. 3 billion is nothing to a NHS budget of over 110 billion… of course it will help but not as much as you would think, or even see a difference from a macro point of view…

    anyway my point is that the GDP increase is looking at more like 0.06%, instead of 0.1%.. it’s still 1.5 billion though CUT THIS ****

  6. So it will cost us more than we make, it might provide some unmeasurable long term benefit, but WILL cause disruption, and HASSLE.
    I work in London and Im dreading it, travel will be worse than it is already. And as a pilot I will be blocked from flying. They are turning most of the south east into a restricted/prohibited zone that will block most flight schools from teaching and other GA activities for 2 months, not just the 2 weeks of the olympics!

    Ive never been interested in the Olympics, but now I despise them, all that disruption and I’ve not spoken to anyone in this country who thinks they’re a good thing! Why spend so much on something the vast majority of us dont want. Even the British athletes wont be able to afford to go to the opening ceremony – what a joke!

  7. to but we dont want it..

    Wow you are so narrow minded. It’s going to cause disruption, of course it is! It’s the largest sporting event in the world! You should be proud to host it in London. Its going to create over 10,000 jobs AFTER the Games never mind all the jobs it will create leading up to and after it. How many houses are being built in the UK nowadays?? Not many, so for the construction industry it is having a positive impact creating jobs. They are going to convert buildings into schools, housing, shops, restaurants etc. The NAtional Rail have spent 150m on upgrades and new lines. that another 400,000 seats into London a day from the East (VERY MUCH NEEDED)
    Millions of tourists from around the world will be pouring into the UK all of whom will need a place to sleep. Hotels and restaurants will make an absolute fortune.

    There are a just few points for you right there.
    The legacy of these Olympics will definitely have a long lasting economic benefit to London and hopefully the UK.

    MAybe you should speak to the millions of people who participate and spectate in sports week in week out (not just football/rugby) and see if they dont want the Olympics to be held in London! You depressed little smirf.

  8. Well.. look at the positive side of olympics.
    Despite the costs of building, tourists will be there to buy things. Use of many transportation systems and all that will definitely be beneficial.

  9. Any one who thinks that the 2012 olympics will encourage people to take part in more sport and active recreation are seriously deluding them selves ; I work for a market research company as an interviewer and we have been asking the question for about 2 years now – ” will the forthcoming olympics encourage you to take part in more sport and active physical recreation ” . Not a single person over the age of 15 has answered in the affirmative. More likely it will just encourage people to go out and buy a 50″ plasma TV and slob around on the sofa watching it.

    • no the olympics wont in themselfs, though what you dont understand is that alot of sporting events aimed at getting people will and have been created by using the olympics push them, now they havnt reached their original target of 1 million but 500,000 more poeple hve got more involved in sport. Also its proven that after every mega event sporting participation increasing though arguble not long term.


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