Swiftonomics Explained: Why Taylor Swift Economics Isn’t Real

Taylor Swift is taking Europe by storm, with some experts predicting unexpected commercial success as fans flock to dozens of sold-out shows from Dublin to Vienna and beyond.

It is hoped that Swift, along with the Olympic Games in France and the 2024 European Football Championship in Germany, will give a new boost to the continent, which has narrowly avoided recession for most of the past two years and has lagged far behind the United States.

However, there is a problem: “Swiftonomics” does not actually exist.

“Switonomics is not real”

She may be a megastar revolutionizing the music industry, but once the excitement dies down, you have to look with a magnifying glass to see the economic benefit.

A good example of this is Stockholm. Almost 180,000 fans attended their three shows in May, half of them from abroad, generating revenue for the city of almost 850 million krone ($81 million).

For Stockholm, that’s a considerable three-day journey, but even for Sweden’s medium-sized economy, it’s just a drop in the ocean. With an annual production of $623 billion, the country ranks eighth in the European Union.

“This additional revenue is a great weekend boost for Stockholm and especially for the tourism sector,” says Carl Bergkvist, chief economist at the Stockholm Chamber of Commerce. “But it is just a weekend without any visible or significant impact on overall economic growth.”

Hotels and restaurants made fortunes, and even sales of cowboy hats rose by 155 percent, the chamber estimates.

The impact on prices is equally invisible and may even be smaller than when Beyoncé performed in the city a year earlier, which sparked a temporary inflation scare. Beyoncé effect or not, Swedish inflation has since fallen from 10% to just over 2%.

“Effect small and temporary”

“Is there a Taylor Swift effect? ​​At best, it is extremely small and temporary,” says Carsten Brzeski, economist at ING.

“There are extensive studies in the run-up to major events that show the economic benefits, but in hindsight you have to look at these so-called benefits with a magnifying glass,” said Brzeski.

The same ruling applies to the Olympics or the European Championships in 2024.

They are a blessing for restaurants, beer sales and merchandising, but have no lasting impact on consumer behavior.

“The consumer spending that occurs is spending that would have occurred anyway and tends to be a form of substitution,” explains Professor Simon Shibli of Sheffield Hallam University.

The argument is that the money spent on a concert ticket or hotel would come out of the family budget, leaving less for other expenses such as restaurants or travel.

Danske Bank’s not entirely serious “draught beer index” showed massive price increases during Denmark’s last European Championship. At a match against England, pub and restaurant revenues rose by 106 percent compared to normal revenues.

Monitoring consumer spending

“At a micro level, such events provide a boost, but even this is small and temporary,” says Piet Haines Christiansen of Danske. “They are relevant to certain industries, such as hotels and restaurants wherever Taylor Swift performs, or beer sales in countries where football is played.”

Some local media outlets pounced on Barclays’ investigation into Swifties’ spending habits last month, claiming their concerts would bring a billion pounds to the British economy.

But in addition to the likely substitution effect they will have on other expenses, there is the fact that much of the revenue from Swift’s tour will end up in the United States, further reducing the already small local economic benefit.

Even in economies the size of Great Britain or those of continental Europe, such transfers would have no impact on the trade balance: the 20 countries of the euro zone recorded an export-import balance of no less than 39 billion euros in April alone.

(1 US dollar = 10.4619 Swedish kronor)