The rocketing cost of staging Olympic Games has made it too expensive for many cities to contemplate. In the bidding to host the 2024 Games, three out of the five bidders – Boston, Budapest and Hamburg – withdrew, largely on grounds of cost.

But new research suggests that, for London at least, hosting the 2012 games was worth the £9.3bn price tag, thanks to the temporary feelgood factor it bestowed on the capital’s residents and, to a lesser extent, on the rest of Britain.

Work by a team at the Centre for Economic Performance, based at the London School of Economics, suggests the average Londoner would have been prepared to pay almost £900 to host the games, such was the boost it gave their mental wellbeing.

The research suggests that the decision by the organisers of this year’s Tokyo Olympics to push the games back to next year, rather than cancel them altogether, may be justified, if it gives a similar fillip to the city and Japan as a whole.

The team reached its conclusion after studying the mental outlook of 26,000 residents living in three cities – London, Paris and Berlin – before, during and after the 2012 games.

The team found a significant increase in life satisfaction among Londoners over the course of summer 2012 which, after stripping out everything else, they attribute to the hosting of the games.

Christian Krekel, research fellow at the CEP, said there was evidence the feelgood factor extended beyond Britain.

“Although we find clear evidence that the subjective wellbeing effects are larger in the host city, there is also evidence for positive spillover effects to other countries,” Krekel said.

External factors such as the weather and political events were taken into account. The wellbeing of Londoners was found to change little as the medal count rose, suggesting the increase came from their pride in hosting the event rather than Britain’s sporting success.

The large volume of wellbeing data now available allows economists to put a price on a potential boost to someone’s positive outlook.

In the case of the 2012 games, the economists suggest that the increase in wellbeing was was worth up to £892 to the average Londoner – the equivalent of London paying £7.4bn to host the games. This was almost £2bn below the actual cost. But separate research suggests that people living outside the capital were also willing to pay - though a smaller amount than Londoners .

The researchers claim: “If UK residents outside of London had a willingness to pay that was, say, half that of Londoners, then a case could be made that hosting was actually worth the costs.”

The feelgood factor was, however, relatively short-lived. A year on and wellbeing levels in the capital were back to normal.