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Bloomberg and Goldman Sachs predict Brazil to win World Cup

World Cup 2014 mascot
Photo by Thananuwat Srirasant/Getty Images

Yesterday, Goldman Sachs released a 60-page report providing their economists' predictions of who will win World Cup 2014. According to their detailed model and game by game analysis it is Brazil who will emerge victorious after defeating Germany 2-1 in the semifinals and Argentina 3-1 in the final. Sachs has been predicting World Cup winners since 1998, but has used different models.

Nearly two days ago, Bloomberg Sports came out with its prediction about who would win the World Cup 2014 in Brazil. They concluded that Brazil would win the cup, after defeating, in order, the Netherlands in the Group of 16, Colombia in the quarterfinals, Germany in the semifinals, and Spain in the final, all by the identical 1-0 score line.

The Bloomberg prediction is based on their own "national team rating" derived last year when the final eight cup groups were known. They then simulated each match 100,000 times to create a statistical probability projection of potential outcomes. That way they could come up with a prediction of who would beat whom in any head-to-head confrontation. Their work is shown in an interactive chart which can recalibrate itself as the cup progresses.

Sachs prediction is based on a combination of their economists' analyses coupled with expert opinion from football experts such as Franz Beckenbauer, and current Brazilians playing in London Oscar, Ramires, Willian and David Luiz. Then, they break down each of the 64 cup matches by using the entire history of official international matches since 1960 (approximately 14,000 games) to see who has won what match, to determine head-to-head odds. Finally, they factored in several secondary, additional pieces of data including how many goals each team has scored over their past ten internationals.

Sachs also surveyed their clients and came up with an all-star 11 based on the 1700 responses received. Their team had: Manuel Neuer as goalkeeper, Sergio Ramos, Dani Alves, Thiago Silva and Philipp Lahm in defense, Eden Hazard, Andres Iniesta and Franck Ribery in midfield, and Neymar, Lionel Messi and Cristiano Ronaldo as strikers.

That both financial institutions should come out with the same result as the odds makers predict is no surprise, and that Sachs' all-star team should include the recently voted best goalkeeper in the world, three superstar Brazilians, and the three candidates for the recent edition of the Ballon d'Or, is also an expected result. But, an interesting if somewhat unexpected result of the models is the prediction of specific game scores as opposed to simply results.

Bloomberg feels Argentina and Spain will meet and tie 0-0 in the semifinals, and while Sachs agrees on the draw, they see it as a 1-1 tie. Meanwhile Brazil will squeak by the Dutch 1-0 according to Bloomberg while the hosts will win 3-1 according to Sachs. Neither predictive model seems to agree on what all of the elimination round match-ups will be, with Sachs having Iran, and Bloomberg Bosnia, in the Group of 16 match up with an agreed upon France.

What is also interesting is that in Bloomberg's model Brazil scores 4 goals and concedes none in the entire elimination rounds while in Sachs' model, over the same four games, Brazil scores 11 goals and concedes 4, one to each opponent.

Applying the Sachs model to prior cups to see if the predictors pan out confirmed that despite the scientific nature of the model it does not predict overly accurate results, particularly the closer one gets to the final. Using the model Sachs now uses, and applying it to the 2010 World Cup, the model would have predicted five of the eight quarter finalists and three of the four semifinalists, but it would have given Brazil a 27% chance to win the cup, Spain a 16%, the Dutch 15%, the Germans 13% and Uruguay 0.7%. The latter team made the semifinals and produced the top player of the cup, Diego Forlan.

Predicting the outcome of the World Cup is one of the oldest pass times among fans and pundits, but perhaps a hidden disclaimer in the Sachs report, on page seven, states reality best " is ultimately a pretty random game."

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