The geeks at UBS Wealth Management Research have caught World Cup fever, and have made some interesting predictions about how this year's soccer World Cup will pan out.
Based on a simulation, the analysts have determined that Italy will win. The simulation was carried out using scientific methods comparable to those used by experts to make economic and financial-market forecasts. The model developed by analysts was then tested for reliability by applying it to past football World Cup and European tournaments, with remarkably precise results: the simulation correctly predicted 89 percent of all of the semi-final winners of the previous nine World Cups.
The simulation
According to the UBS simulation, further results will be as follows: Germany will lose to Argentina in the 3rd round and Italy will beat France at the same stage. They will be closely followed by the Netherlands, who will send England home. In the fourth pairing, the Brazilians will dominate the Spaniards. The semi-finals will then be down to the favorites: the Netherlands will draw the short straw against the Brazilians, the Italians will beat Argentina. In the final, the Brazilians will be forced to accept the fact that the Italians are the better team in this tournament.
Many influencing factors
Along with "football fever", the team around UBS Wealth Management Chief Economist Klaus Wellershoff was interested to find out what variables are important in predicting World Cup success. In doing so, they discovered that many things that appear to be obvious are, in fact, not crucial to winning the World Cup. An example of this would be the size of a country's population, which is often incorrectly correlated to the amount of potential athletic talent. The FIFA rankings, which list the top national soccer teams, also prove to be of limited use when it comes to making a prediction: the FIFA list compiles the sporting success of the individual teams but assigns equal value to all wins, no matter how strong the opponent.
Reality wins
The creation of the World Cup prediction was an intellectual change of pace for the UBS analysts, but it also delivered additional insights. The exercise, for example, gave the experts the opportunity to demonstrate the flexibility of their methods outside their typical parameters.
Of course, there are also limits. According to the model, Greece would never have become European champion in 2004. Sports do still follow their own rules - and are more attractive than any simulation.
Question: If Italy loses, will the billionaires take their money away from the managers at UBS Wealth Management?
Since Italy won, the last question of this article will remain unanswered for the next four years...