The 2019 FIFA Women's World Cup has garnered much attention. But can we use economic factors to predict the winners?
Historically a neglected sport, women’s football is growing in popularity and participation. In the UK, the 2019 FIFA Women’s World Cup has been avidly followed, with the England and Scotland game drawing a record 6.1 million viewers on BBC television.
The men’s FIFA World Cup has been much analysed by investment firms using quantitative models with economic and financial data to predict the winners.
So we decided to try to predict the winners of the women’s competition using economic factors and the national teams’ previous performance.
The sovereign governance index
We used the World Governance Index (WGI) developed by the World Bank, a broad cross-country comparison, to evaluate governance and social trends over time. It captures data from public and private-sector surveys, including:
(i) Voice and accountability (which captures perceptions of the extent to which a country's citizens are able to participate in selecting their government, as well as freedom of expression, freedom of association, and a free media).
(ii) Political stability and absence of violence (which measures perceptions of the likelihood of political instability).
(iii) Government effectiveness (which captures perceptions of the quality of public services, the quality of the civil service, and the degree of its independence from political pressures).
(iv) Regulatory quality (which measures perceptions of the ability of the government to formulate and implement sound policies and regulations that permit and promote private-sector development, assessed for example by the existence of any discriminatory policies and the ease of starting a new business).
The World Bank has more details on these criteria.
The most common participants in the FIFA Women's World Cup
Participation is dominated by developed countries, which typically have higher sovereign and socioeconomic scores, with some exceptions. The US, Germany, Japan, Australia, Brazil, Canada, Nigeria, Norway, and Sweden have participated in all FIFA Women's World Cups since 1991. The US is the most consistent nation in terms of best and worst position in previous World Cups (see Table 1 below).
Note: Composite score. 100 is the best and 0 is the worst.
We found a positive relationship between high governance/socioeconomic scores and a nation’s performance and ability to qualify for the World Cup.
Note: Governance/socioeconomic score refers to the average of the Worldwide Governance Indicators in the years prior to the World Cup. Linear regression has found a relationship between the World Cup ranking and the governance scores.
Prediction model based on governance, socioeconomics and macroeconomic indicators
We constructed a four-factor model using the WGI index incorporating sovereign governance, participation in previous World Cups, and Gross Domestic Product (GDP) as an indicator of the talent pool for player selection. Historically, governance/socioeconomic scores and GDP have been the most significant factors in predicting the final results of the FIFA Women’s World Cup.
We therefore project that the US will remain the powerhouse of women’s football, lifting the 2019 trophy. Germany, Japan and China should reach the semi-finals. Sorry, England.
Note: The predication model is a multi-linear regression model using the worldwide governance score, historical participation, numbers of championships won, and the nations’ weights in world GDP. This blog presents a model forecast and it represents one of the many possibilities of the tournament's final result, as it depends on final stage draws.
In the corporate world, well governed companies are likely to be more resilient over the long term and deliver stronger performance for shareholders. Human-capital issues such as gender diversity, equal opportunities, and human rights could enhance companies’ operational performance. Investors, customers and employees are more likely to want to be part of or be associated with that company, allowing them to innovate, grow and succeed. Arguably, this should be no different in a nation’s performance in sports.
An enlarged international audience for the Women’s World Cup might just raise countries’ social governance standards, like the strong trend being witnessed in the corporate world.
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