How Econometrics Can Help You to Understand World Cup Football

Now that the DV409 exam is done many of you will have turned your full attention to World Cup football (if you can stand that noise....). But did you know that your newly honed econometric skills can also help you better understand the Beautiful Game?

In the middle of the 1990s, the European soccer body UEFA recommended to the National Soccer Federations that they should reward three points for a win instead of two points as under the old regulations. Soon, this new system was universally adopted by all countries. The purpose of this change in the rules was to encourage a more attractive attacking style of play and reduce the number of scoreless games that were then widespread.

However, as Olkesandr Shepotylo (a friend of mine from Kiev) pointed out, the increase in points potentially created a high incentive for collusion in games between teams that are almost equally strong (since the possibility of a draw is very high and the reward for one victory and one defeat is higher than the reward for two draws), and do not compete for the upper ranking positions in the championship (for reasons that are clear to soccer fans and those who read his paper carefully, but which eludes me...). In particular, under the new rules colluding clubs will pursue a strategy of winning home games in exchange for losing away games.

Oleksandr compared data from the Italian, Soviet and Ukrainian league from 1980 (or 1993 for Italy) to 2003. He found that in low-corruption countries (Italy... yes, yes, I know - this is relative corruption, remember!) with highly competitive tournaments, the three-point rule had a positive effect. However in the high corruption countries (Ukraine in particular) there was a pattern consistent with collusion (i.e. many more home wins and away losses than draws compared to the pattern before the rule change).