Is money well spent on Arctic Winter Games?

Were the Arctic Winter Games a good investment? This kind of question often gets asked of economists, either by the proponents of major events, their opponents, or governments trying to decide whether to splash out some public cash.

Were the Arctic Winter Games a good investment?

This kind of question often gets asked of economists, either by the proponents of major events, their opponents, or governments trying to decide whether to splash out some public cash.

Choice of language always gives away which side the economist is on. If in favour, public spending on big events is an “investment.” If against, it is a “subsidy.”

The economic analysis of these events has become a big business in its own right. There is a library of economic studies on the Olympic Games, and plenty of glossy studies have been commissioned to support public funding for facilities like a new NHL hockey rink in Quebec City.

Just to be clear up front, as a citizen, I think the Games were a smashing success and worth every penny the Yukon government put into them. The vision of northern comradeship that inspired former Yukon commissioner Jim Smith, former Alaska governor Wally Hickel and former N.W.T. commissioner Stuart Hodgson to create the games was a powerful idea. You can see it in action at the Games as today’s young Yukon athletes compete and make friends with Siberians, Alaskans and other northerners.

The Games also put some sparkle into jaded and winter-weary adult eyes around town. Indeed, it looked to me like some of the adults were having more fun than the kids last week.

It is, however, a tougher challenge to prove to an economist that the Games were a good “investment.”

The organizing committee of the 2000 Games estimated that the event raised Whitehorse’s gross domestic product by $3.489 million and created 106.12 person years of employment.

Without getting into the details of the worthy consulting study behind those numbers, in general you can say that considerable caution should be used about economic-impact studies.

A key point of contention is the “multiplier.” If someone from Alaska drives to Whitehorse and spends $1,000, then the Whitehorse businesses, which get that money, spend some of it again on wages or other products, and the recipients of that money then spend it one more time. And so on. The total increase in spending could be three or four times the original amount of Alaskan cash.

It is also difficult to differentiate between economic activity that is new versus merely displaced. If I spent $50 on Arctic Winter Games tickets, is that a boost to the economy or a net zero impact since I didn’t take the family to the movies that night? If the boost is from extra government spending, did the event add some special value to that spending or did it just replace spending that another department would have made?

Famous economists have made the point that you can use similar logic to justify hiring people to dig holes and fill them in again, or even just dropping money from helicopters.

There is also lots of debate about inflows of money. Certainly the Alaskan dollars and Yamal rubles spent in Whitehorse weren’t here before. But does that mean we should ban our delegation from taking their Yukon dollars to Fairbanks in 2014?

Also, economic impact studies often underestimate costs. What was the added cost to business because of congestion, absent workers and so on. Apparently the museum in Indianapolis closed when the Super Bowl was held in that city, since art lovers made it clear they wouldn’t go within 100 miles of Lucas Oil Stadium. That impact probably was not in the NFL’s economic impact press release.

Finally, there is also the question of long-term assets. These cost money to build, but deliver lasting benefits to the community. The Canada Games Centre and the Montreal Olympic Stadium are classic examples, one viewed quite positively and the other not so much. How do you assess the long-term value of these assets?

Generally, so many assumptions are required to get to the final economic impact number that relatively small tweaks to the assumptions can produce quite different results.

So beware economists bearing multipliers. The real question is: “As a society, do we want to spend X dollars on hosting this fine event?”

As I said above, my answer is an absolute positive for the Arctic Winter Games. I just don’t think we can prove that it was a profitable government “investment.” It was an expense.

There is one other aspect of the Games that is fascinating to an economist. That is how well the Games were run by a largely volunteer workforce. In fact, more than a few volunteers seemed to dread giving up their unpaid outdoors work with high-maintenance teenage athletes to return to their paid jobs.

Economists spend a lot of time studying productivity, often measuring education levels, capital investments, and so on. But the research is seldom definitive, since there is a big human variable in productivity. How hard you work depends on things like whether you believe in your organization’s mission, have a strong relationship with your manager and feel like part of the team. “Employee engagement” is a common buzzword.

It is clear that the volunteers at the Games felt engaged. But on the following Monday, how many felt the same excitement and energy heading to their “real” jobs?

This is a major challenge for large corporations and governments. There is a well-known case study of a middle-manager who was unengaged and underperforming at work and was written off as a Dilbertesque hardcase, but turned out to have a secret life as the convenor of a highly successful youth soccer league. He had the talent and skills, but just had no interest in sharing them with his employer.

We don’t have good data for the Yukon private sector, but the Yukon government “employee engagement” index is 60. Not the worst, but noticeably lower than the Ontario public service score last year of 69.

So, to an economist, the real value of last week’s events would be in figuring out how to change our workplaces so employees feel more like volunteering at the Arctic Winter Games.

Keith Halliday is a Yukon economist and author of the Aurore of the Yukon series of historical children’s adventure novels.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Willow Brewster, a paramedic helping in the COVID-19 drive-thru testing centre, holds a swab used for the COVID-19 test moments before conducting a test with it on Nov. 24. (Crystal Schick/Yukon News)
An inside look at the COVID-19 drive-thru testing centre

As the active COVID-19 case count grew last week, so too did… Continue reading

Conservation officers search for a black bear in the Riverdale area in Whitehorse on Sept. 17. The Department of Environment intends to purchase 20 semi-automatic AR-10 rifles, despite the inclusion of the weapons in a recently released ban introduced by the federal government, for peace officers, such as conservation officers. (Crystal Schick/Yukon News file)
Environment Minister defends purchase of AR-10 rifles for conservation officers

The federal list of banned firearms includes an exception for peace officers

Yukonomist Keith Halliday
Yukonomist: The K-shaped economic recovery and what Yukoners can do about it

It looks like COVID-19 will play the role of Grinch this holiday… Continue reading

Jodie Gibson has been named the 2020 Prospector of the Year by the Yukon Prospectors Association. (Submitted)
Jodie Gibson named 2020 Prospector of the Year

Annual award handed out by the Yukon Prospector’s Association

A number 55 is lit in honour of Travis Adams, who died earlier this year, at the Winter Wonderland Walk at Meadow Lakes Golf Club in Whitehorse on Nov. 24. (Crystal Schick/Yukon News)
A new take on holiday traditions

Winter Wonderland Walk, virtual Stories with Santa all part of 2020 festive events in Whitehorse

Black Press Media and BraveFace have come together to support children facing life-threatening conditions. Net proceeds from these washable, reusable, three-layer masks go to Make-A-Wish Foundation BC & Yukon.
Put on a BraveFace: Help make children’s wishes come true

Black Press Media, BraveFace host mask fundraiser for Make-A-Wish Foundation

Colin McDowell, the director of land management for the Yukon government, pulls lottery tickets at random during a Whistle Bend property lottery in Whitehorse on Sept. 9, 2019. A large amount of lots are becoming available via lottery in Whistle Bend as the neighbourhood enters phase five of development. (Crystal Schick/Yukon News file)
Lottery for more than 250 new Whistle Bend lots planned for January 2021

Eight commercial lots are being tendered in additional to residential plots

The Government of Yukon Main Administration Building in Whitehorse on Aug. 21. The Canada Border Services Agency announced Nov. 26 that they have laid charges against six people, including one Government of Yukon employee, connected to immigration fraud that involved forged Yukon government documents. (Crystal Schick/Yukon News file)
Charges laid in immigration fraud scheme, warrant out for former Yukon government employee

Permanent residency applications were submitted with fake Yukon government documents

Whitehorse City Hall. (Joel Krahn/Yukon News file)
City hall, briefly

A look at decisions made by Whitehorse city council this week

Karen Wenkebach has been appointed as a judge for the Yukon Supreme Court. (Yukon News file)
New justice appointed

Karen Wenckebach has been appointed as a judge for the Supreme Court… Continue reading

Catherine Constable, the city’s manager of legislative services, speaks at a council and senior management (CASM) meeting about CASM policy in Whitehorse on June 13, 2019. Constable highlighted research showing many municipalities require a lengthy notice period before a delegate can be added to the agenda of a council meeting. Under the current Whitehorse procedures bylaw, residents wanting to register as delegates are asked to do so by 11 a.m. on the Friday ahead of the council meeting. (Crystal Schick/Yukon News file)
Changes continue to be contemplated for procedures bylaw

Registration deadline may be altered for delegates

Cody Pederson of the CA Storm walks around LJ’s Sabres player Clay Plume during the ‘A’ division final of the 2019 Yukon Native Hockey Tournament. The 2021 Yukon Native Hockey Tournament, scheduled for March 25 to 28 in Whitehorse next year, was officially cancelled on Nov. 24 in a press release from organizers. (John Hopkins-Hill/Yukon News file)
2021 Yukon Native Hockey Tournament cancelled

The 2021 Yukon Native Hockey Tournament, scheduled for March 25 to 28… Continue reading

Lev Dolgachov/123rf
The Yukon’s Information and Privacy Commissioner stressed the need to safeguard personal information while shopping this holiday season in a press release on Nov. 24.
Information and Privacy Commissioner issues reminder about shopping

The Yukon’s Information and Privacy Commissioner Diane McLeod-McKay stressed the need to… Continue reading

Most Read