The saga of the Olympic Stadium in Montreal has once again hit the headlines. After 35 years, two torn roofs and countless attempts to install a third roof, we learned that the business project on the table foresees costs between 750 million and a billion dollars. This sum would include the replacement of the technical ring of the stadium.
If we rely on the statements of Prime Minister François Legault and some of his ministers, it seems that the government is motivated to move forward with the project despite the enormous costs. This would, it seems, give a positive image to this monument. However, before injecting such gigantic sums of public money, public authorities should ask themselves whether the costs are really worth it. However, it seems that decisions regarding this building are guided not by rational choices, but rather by certain cognitive biases on the part of public authorities.
First of all, a cognitive bias can be defined as a thought mechanism that modifies reasoning and leads to irrational decision-making, based on perceptions and a priori. This concept, first developed in psychology, is also very important in economic studies to understand the choices and behaviors of economic actors.
Sunk costs
In economics and public policy, an important bias that often leads to bad decisions is that of sunk costs. This reasoning consists of continuing a project, even if the costs exceed the benefits, because the investments already made in money, time or effort are too great. In other words, it’s saying “I can’t stop this project because it’s already cost me a lot.”
In English, it is sometimes referred to as Concord fallacy with reference to Concord, the late supersonic aircraft that is a famous example of this phenomenon. The British and French governments persisted for 27 years in injecting colossal sums of money into the project, although even before its first maiden flight, the costs were unsustainable.
Their thinking was that they had invested too much public money to stop the project. They just wasted more of that public money. However, economics teaches us that when it comes to making a decision regarding the future of a project, past costs should not be included in the calculation. They constitute irrecoverable expenses. It is imperative to analyze the viability of a project as if past investments had not taken place. This avoids, as in the case of Concordto lose even more money.
In the case of the Olympic Stadium, it seems that public decision-makers are struggling with this cognitive bias. “A lot of money has been invested in the Olympic Stadium, it is also a symbol of Montreal,” declared Mayor Valérie Plante. Same story from Michel Labrecque, CEO of the Olympic Park, who said in an interview with Patrice Roy on Ici Radio-Canada that Quebec taxpayers have invested five billion in this project, and that it would therefore be unthinkable not to reinvest in repairing the roof and the technical ring.
However, it appears that even if plans for a third roof and new technical ring go ahead, the stadium will not be truly fit to host large-scale events. We would dream of hosting Taylor Swift or NFL matches, but for that, we would also have to renovate the entire interior of the stadium, because the soundproofing is faulty. In short, even more public funds.
Confirmation
Confirmation bias is a propensity to interpret a situation based on our beliefs rather than objective reality. This phenomenon primarily applies to scientific research, where researchers may tend to only consider data that confirms their hypotheses and ignore those that contradict them.
This could be extrapolated to the case of the stadium. Another reason put forward in favor of investing in the renovation is that it would be a jewel for Quebecers. According to Valérie Plante, François Legault, Michel Labrecque and others, it is a symbol of Montreal. On what grounds do they assert this, besides their personal perceptions? Are there studies showing that Quebecers consider it to be a jewel that should be saved at all costs? For my part, I didn’t find any. It then seems that our leaders are guided by their preconceptions, rather than by an objective assessment of reality.
Regarding the future of the Olympic Stadium, decision-makers automatically rule out the idea of demolition, either to build a new one, or to reassign the site for other purposes. It is a mistake. As explained above, this is largely based on reasoning processes that bias decision-making. It is important that choices are based on objective data.
It is not certain that demolishing the stadium would be the best avenue. However, it is crucial not to shy away from a broader reflection on the future of a building that has caused so many headaches for years. Everything should be put on the table. Let’s put cognitive biases aside and call on the experts. Let’s ask Quebecers if they are attached to this building or if they would not prefer a new landscape. Why not a referendum?