Bernardo M. Villegas
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BAGS of World Cup 2014

          The World Cup 2014 in Brazil ended July 13, 2014.  Long live Germany!  (And special congratulations to Chancellor Angela Merkel who was present in the major matches of Germany.)  At least for the next four years till the qualifying national teams meet again in Russia in 2018.  Meanwhile, sports analysts and other football aficionados will analyze the results of the various matches to death for some time to come.  As an economist, I prefer to reflect on the relative forecasting success of Goldman Sachs, who gave the business world the acronym BRIC (Brazil, Russia, India and China) to refer to the emerging markets that are supposed to dominate the world economy in the first decades of the twenty first century.  Since we economists arrogantly think we are all knowing, the same investment bank issued a forecast before the World Cup began last June 12 of who the winners would be.  As reported by Samantha White in the CGMA Magazine last May 30, 2014, in a publication entitled "The World Cup and Economics 2014," Goldman Sachs predicted a Brazil vs. Argentina final, with the host nation emerging victorious.  The other two who were supposed to reach the semi-finals were Germany and Spain.  The analysts ranked the four football powers as follows:  Brazil (probability of 48.5); Argentina (14.1); Germany (11.4) and Spain (9.8).  Netherlands was ranked fifth with 5.5 probability.  Following the example of the BRIC acronym, we can use BAGS (Brazil, Argentina, Germany and Spain) to represent the expected winners.  I must say that, with the exception of the catastrophic exit of Spain very early in the competition, the Goldman Sachs analysts got the semi-finalists right.

          Using the language of econometrics, the authors of the report built a stochastic model to generate a distribution of outcomes for the tournament's 64 matches that took place between June 12 and July 13 (during which football fans, including myself, in the Philippines lost hours of sleep when they had to be awake between midnight to 5 a.m. almost every day).  The predictions for each game were based on a regression analysis that took into account the result of all the competitive matches the teams have played since 1960 (that's an example of data analytics, a budding industry in our KPO sector). From there, the probabilities of each nation winning the championship were calculated.  As indicated above, Brazil emerged the clear favorite, followed by Argentina, Germany, Spain and the Netherlands.  As things turned out the acronym should have been GANB.

          An interesting detail was the application of the same model to the 2010 World Cup in South Africa.  It also correctly picked three out of the four teams to make the finals but also backed Brazil to be the winner.  In reality, it was Spain who bagged the trophy.  The Goldman Sachs analysts were especially confident about their 2014 forecast because no European team has ever won a World Cup held in the Americas plus the fact that Brazil has won the tournament five times, more than any other national team.  The report also volunteered the information that the availability of vast open tracts of land (as in Brazil and Argentina) increases a country's chances of making it to the World Cup finals. As an aside, I have just spent several weeks in Bukidnon, which has vast tracts of land.  No wonder, there is a passion for football in this province which I do not see in other places in the Philippines.

          What the predictive model was not able to foresee was the serious injury to the vertebrae of Neymar, a key player in the Brazil team.  The Argentine fans will be wondering forever how the results would have changed in the final match if Real Madrid's Di Maria was able to play to assist star player Lionel Messi, who still got the award of the Golden Ball despite his seemingly lackluster performance in the final game.  My own very parochial concern is to see Neymar fully rehabilitated when the next Spanish league begins because of my  expectation to see FC Barcelona (Barca) where he plays with Messi recover the glory they lost in the last season when they won no prize at all (after having broken all records during the 2008 to 2012 seasons under Pep Guardiola)  Another tidbit that reinforces my campaign to make football the national sport in the Philippines (in place of basketball) was the interesting coincidence that the hero of the German team who scored the winning goal seven minutes from the end of extra time was Mario Goetze, a liliputan compared to his towering teammates.  In 2010, an almost identical event occurred.  It was Andres Iniesta, another shorty, who delivered the goal that gave Spain the number one spot, also in extra time.  I don't want to imagine what will happen in Madrid in the World Championship in Basketball when our basketball players will be struggling with the Goliaths and the Transformers of the world's leading teams.  For comments, my email address is