Not just the bookies, even economists could not distance themselves from the football euphoria engulfing the globe and they forecast who will win 2014 World Cup.
The football fever is on. Against the turmoil of people who are against it, for various reasons, be it the rampant corruption the country hosting it is laced with, the use of military force in Brazil to contain the opposition, and pictures of starving, homeless people flashing across the screens and Internet. Keeping all these aside, the country continued with stronger determination with every opposition to host the World Cup in all the glamour it deserves.
Moving ahead, while the football fans are busy biting their nails with heightened anxiety and uncertainty about who would lift the World Cup 2014, let us have a look at what the economists have to predict about the outcome of the World Cup football 2014.
This season is no different from previous world cup editions. There have been predictions as to who will win the World Cup, some based on the team strength, team performance, team quality, and quite a few of them based on mathematical modeling.
A report by Standard Chartered, The World Cup Edition—A mix of economies, markets and football evaluates the possible winner through Quantitative Optimization whereas Goldman Sachs predicts the outcome of the 2014 World cup through a stochastic statistical model using regression analysis.
The Standard Chartered Report, authored by Marios Maratheftis, based on the predictions of Toh Hsein Min, Global Head of Quantitative Optimization, forecasts Brazil, Spain, Germany and Argentina to be four finalists and Brazil would lift the cup, a prophecy no different from the past. Football has been dominated by Latin American and European teams and 2014 will follow the set trajectory.
The projections based on Monte Carlo simulation, a technique that models the future value of an asset based on its behavior over time, were accurate for 2010 World cup as well, when it had predicted that Spain would take the World cup 2010 home.
The study has taken performance data of the participating teams from the Elo ratings, which is a composite measure of national football team success based on their historical track record.
Some of the highlights of the Monte Carlo simulation predictions for the 2014 World Cup include:
- Switzerland will narrowly fail to qualify, losing out to France and Ecuador
- Within Africa, Côte d’Ivoire will most likely qualify; may contest with France or Japan for a place in the second round
- Within Asia, South Korea is most likely to qualify.
- Iran in Group F may face three-way contest while Group D countries (England, Italy, Uruguay) will pose stiff competition.
- The knock out results as predicted by the model indicate that the second round eliminations would include countries Belgium, Bosnia and Herzegovina, Colombia, Ecuador, Greece, Mexico, Netherlands and Russia.
- The quarterfinalists will be England, France, Portugal and Uruguay.
- Brazil will be the winner with Spain, Germany and Argentina as second, third and fourth, respectively.
- It also predicts that the average number of goals would be 148 with a standard deviation of 14.
Now let us look at the predictions of Goldman Sachs, A Statistical Model of the 2014 World Cup, based on regression analysis which uses number of goals as the dependent variable scored by each side in each match and the explanatory variables used in the analysis were the difference in the Elo rankings between the two teams, the average number of goals scored by the team over the last ten mandatory international games, average number of goals received by the opposing teams over the last five mandatory international games, a country specific dummy variable to indicate if the game took place at a World cup, a dummy variable to indicate if the team played in its home country and finally a dummy variable to indicate if the team played on its home continent.
The highlights of predictions are:
- Brazil, Germany, Argentina and Spain will reach semi-finals.
- Brazil will win the World cup with Argentina and Germany in the second and third positions, respectively.
- The report also lists out the possible reasons why Brazil would win: it is the highest rated team by the Elo rating system, it is a strong performer in the World cup with home crowd advantage as well as home continent advantage.
Both reports declare Brazil as the winner of the 2014 World Cup, however, it differs on predictions about which country would be second, third and fourth. The Standard Chartered Report predict Spain, Germany and Argentina as second, third and fourth, whereas the Goldman Sachs report Argentina, Germany and Spain at second, third and fourth positions.
Now that Spain is out of the World Cup, we will have to wait till the finals of 2014 World Cup to see if the rest of the predictions really hold ground.