Why Taylor Swift's economy is not real

Taylor Swift is taking Europe by storm, leading some pundits to imagine a financial bonanza as fans flock to dozens of sold-out shows from Dublin to Vienna and beyond.

Taylor Swift is taking Europe by storm, leading some pundits to imagine a financial bonanza as fans flock to dozens of sold-out shows from Dublin to Vienna and beyond.

Swift, along with the Olympics in France and the Euro 2024 soccer championship in Germany, is expected to provide a boost for a continent that has been on the brink of recession for most of the past two years and has lagged far behind the United States.

But there's a problem: "Swiftonomics" isn't really real.

He may be a megastar who is revolutionizing the music industry, but once the excitement wears off, you'll need a magnifying glass to find the financial gain.

Take Stockholm as an example. About 180,000 fans attended its three shows in May, half of them from abroad, generating about 850 million kronor ($81 million) in revenue for the city.

That's a big three-day collection for Stockholm, but a drop in the bucket even for Sweden's modest economy, which ranks eighth in the European Union with an annual output of $623 billion.

"This additional income is a great weekend boost for Stockholm and, in particular, for its tourism sector," says Carl Bergkvist, the Chief Economist of the Stockholm Chamber of Commerce.

"But it's just that, one weekend, with no visible or significant impact on overall economic growth."

Hotels and restaurants made a killing and even sales of cowboy hats increased by 155%, according to Chamber estimates.

The impact on prices is equally invisible and could be even less than when Beyoncé performed in the city the year before, causing a temporary inflationary scare. Beyoncé effect or not, Swedish inflation has fallen from 10% to just over 2% now.

Is there a Taylor Swift effect? It is extremely small and temporary, at best.

"There's a lot of research prior to big events that describes the economic benefits, but after the fact, you need a magnifying glass to find these supposed benefits in the numbers," Brzeski said.

The verdict is the same for the Olympic Games or Euro 2024.

These are benefits for restaurants, beer sales and merchandisers, but do not have a lasting impact on consumption patterns.

"Consumer spending that happens is spending that would happen anyway and tends to be a form of substitution," explained Professor Simon Shibli of Sheffield Hallam University.

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

Danske Bank's joking "draught beer index" showed massive increases when Denmark played its previous European Championship, reaching a 106% increase in pub and restaurant receipts for a match against England compared to usual takings.

"On a micro level, such events provide a boost, but even that is small and temporary," said Piet Haines Christiansen of Danske. "They are relevant for specific sectors, such as hotels and catering wherever Taylor Swift goes or for beer sales in countries that are playing soccer."

Some local media last month echoed Barclays research into the spending habits of Swift's fans to suggest that her concerts would bring in £1 billion for the UK economy.

But in addition to the likely substitution effect they have on other spending, there's also the fact that much of Swift's tour revenue will end up in the U.S., mitigating an already small local economic benefit.

For economies the size of Britain or those of continental Europe, any such transfer would not move the indicator in their trade balances either: the 20-country euro zone had a balance of exports over imports of no less than 39 billion euros in April alone.

Collaboration: Grupo Auge | Reuters (International).