While several National Olympic Committees provide cash incentives to their athletes who win Olympic medals, the amounts vary dramatically from country to country. Singapore provides the highest prize of about $800,000 to its Gold medalists, while many other countries provide no financial incentive. The UK, for example, offers no cash, but prints postage stamps honoring their Gold medalists. Are financial incentives effective and do they improve medal counts for countries offering larger cash prizes? The chart below plots the countries offering the largest cash incentives against their success in the medal count:
There are several reasons why larger cash incentives are not associated with higher medal counts:
- Athletes at the Olympic level are often incentivized by non-monetary goals like glory, competitiveness, and love for the sport.
- Prior to devoting one’s life to Olympic training, the probability of becoming good enough to medal is so remote that the cash amounts aren’t sufficiently large to offset the enormous risk of not becoming the best in the world at a given event. Moreover, once an Olympian has made it to the Olympics, they will certainly give it their all to win their events.
- Countries that already have a history of underperforming at the Olympics might introduce cash awards precisely to improve their medal counts. Thus, we might expect those countries that are particularly unsuccessful to offer larger rewards.
To the extent that athletes are incentivized financially, the true cash benefit is derived from endorsements, which are usually well in excess of the relatively modest cash incentives offered by the Olympic Committees. However, endorsement opportunities are not available to every medal winner and in some cases focus more on personal likeability than comparative skill.