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Goldman Sachs predicts outcome of the 2014 World Cup

soccer football (1)

Brazil is expected to win the title from Argentina, according to investment bank’s report

May 29, 2014 5:38 by

With the 2014 FIFA World Cup just around the corner, people are making predictions on which team will win the coveted title. And now some organisations are making their guesses too, although they are based on quantitative research methods.

Many argue that a sport, such as football, involves much more than a formula to predict the outcome; however, Goldman Sachs, the global investment banking firm, has statistically concluded that Brazil will win the world cup 3-1 against Argentina.

The World Cup and Economics Report, which was released yesterday (Wednesday, May 28) is a statistical, stochastic study model that generates predictions by calculating a number of possible outcomes for all upcoming matches.

The explanatory variables in the regression analysis are as follows:

1. The difference in the Elo rankings between the two teams; the Elo ranking is a composite measure of national football team success that is based on the entire historical track record. Unlike the somewhat better known FIFA/Coca-Cola rating, the Elo rating is available for the entire history of international football matches

2. The average number of goals scored by the team over the past ten mandatory international games

3. The average number of goals received by the opposing team over the past five mandatory international games

4. A country specific dummy variable indicating whether the game in question took place at a World Cup. This variable is meant to capture whether a team has a tendency to systematically outperform or underperform at a World Cup

5. A dummy variable indicating whether the team played in its home country

6. A dummy variable indicating whether the team played on its home continent, with coefficients that are allowed to vary by country

In addition to Goldman Sachs’ calculation method, others have begun to make their guesses as well.

Bloomberg Sports has also created an elaborate visual plan of expected wins and losses and its guess for the final winner is, also, Brazil – with a 1-0 win against Spain.

While predications are based on statistical formulas, many believe that with a sport, such as football, numbers are not enough. Fans across the world will agree that the crowd’s support plays a big role in the success of a football team.

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