75

Using a panel survey of 26,000 people living in London, Paris and Berlin during the summer months of 2011, 2012 and 2013, we exploit the quasi-natural experience of choosing London as host city. We follow a difference-in-differences approach to determine the effect of hosting the 2012 Summer Olympic Games. Our results show that the Summer Games increased Londoners’ satisfaction and happiness in the short term (i.e. during the Olympic period), particularly around the opening and closing ceremonies. The beneficial effect on Londoners is quite significant, but the monetary equivalent of this gain in terms of subjective well-being remains well below the actual cost of the event. However, the conclusion is different, if we assume that the hedonic effect extends to the whole of the UK and not just to the city of London. JEL classification: