Economic Impacts

Question 1

Establish geographic area of impact:

Answer 1

• province, region, city
• usually reflects funding source
• displaced spending: spending that would occur in the area anyway

Question 2

4 steps of economic impact analysis:

Answer 2

• expenditure approach
• estimate attendance at an event
• survey attendees to find spending associated with the event
• apply multiplier to account for recirculation if money in local economy

Question 3

Multiplier:

Answer 3

the degree to which spending induces additional rounds of spending

Question 4

Income approach:

Answer 4

• total payments to workers and suppliers in related industry
• apply multiplier

Question 5

Substitution effect:

Answer 5

• if attendees spend money on an event instead of something else in the local economy
• reallocation of expenditures, not net increase in economic activity
• a sport and leisure event may lower local economic income if spending is switched from other activities that have a higher multiplier

Question 6

Time switching:

Answer 6

• visit to city already planned
• schedule simply rearranged to accommodate event
• no new economic activity, just changes when it occurs

Question 7

Casual visitors:

Answer 7

someone in an area for unrelated purpose but attends event while they are in town

Question 8

Incremental visitors:

Answer 8

those who come to a region for the purposes of the event - direct spending fully attributable to the event

Question 9

Indirect spending:

Answer 9

recirculation of $$ in economy after direct spending on the event

Question 10

Induced spending:

Answer 10

how direct and indirect impacts affect earnings and employment

Question 11

Direct spending usually recirculated in 5 ways:

Answer 11

• other private businesses in same economy
• employees in same economy
• local government
• non-local government
• employees, businesses, etc. outside the local economy

Question 12

Leakages:

Answer 12

spending that does not remain in the local economy

Question 13

2 issues with overestimation:

Answer 13

• crowding out

- reverse time switchers

Question 14

Crowding out issues:

Answer 14

• may discourage economic activity in areas that are already popular as tourist destinations
• where activity occurs during peak visiting times
• new event spending simply supplanting spending that would otherwise occur

Question 15

Reverse time switchers:

Answer 15

people who leave because of the event

Question 16

Solutions to issues with overestimation:

Answer 16

• ignore local residents in impact estimates
• exclude time switchers and casual
• consider costs and opportunity costs

Question 17

Sum up model:

Answer 17

total economic impact = direct spending + indirect spending + induced spending (household level)

Question 18

Mega-events:

Answer 18

• huge infrastructure costs

- huge operating costs

Question 19

Why are many mega-event estimates grossly exaggerated?

Answer 19

• measuring gross, not net spending

- not considering the lack of spending elsewhere

Question 20

Intangible benefits:

Answer 20

• psychic impact
• impacts received by those not directly involved in the event
• may be used to justify (part of) subsidy to build infrastructure or host an event

Question 21

Psychic impact:

Answer 21

the emotional impact that a community receives by virtue of hosting an event

Question 22

Contingent valuation method:

Answer 22

• survey methodology
• respondents asked their willingness to pay an increase in taxes to see an increase in public good (or avoid losing a public good)

Question 23

Justifying public subsidies for sport may be through _____, not ______ benefits.

Answer 23

• intangible

- tangible