Displacement

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bschmidty5

• September 26, 2016 14:10

Hello, I am working on an analysis that involves projecting the economic impact of a new sports team and stadium. I've looked at other studies and it seems one of the biggest issues of contention is how to deal with displacement, or in this case, how a local attendee would spend their money in the local economy if they didn't attend a sporting event. Some of the studies I've looked at that have analyzed similar activities have dealt with this issue in two ways: 1) Reduce the amount of spending from local attendees to account for this factor (but how they arrived at the adjustment figure is never crystal clear); or 2) Completely leave out any spending attributable to local attendees. My question is about my approach to handling this issue, which is to project the entire amount of spending for both local and non-local attendees and then adjust this by reducing income in the Institutional Spending Pattern Activity for each of the household income groups. And here, I could do one of two things to customize this: 1) Eliminate fixed costs such as mortgage, rent, utilities, insurance, etc.; or 2) Only include household spending on services and goods associated with recreational activities. First, does this approach make sense. Second, if it does make sense, of the two options provided above(eliminating fixed costs or only including spending on recreational activities), which makes the most sense? What would be the best way to customize the Household Spending. Also, is there any way to account for attendees that would otherwise travel out of town but will instead spend their income on attending events held by the new team? Thanks for your help! Brian

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  IMPLAN Support

  • September 26, 2016 19:39

  Hello Brian, Ideally, you could find or collect survey data to determine what local residents would have done with their time/money if they hadn’t attended the sporting event. Without such information in hand, determining how much of the local spending to include in the analysis requires assumptions best made by those with a strong understanding of regional demographics. More often than not local spending is totally excluded from the analysis. However, for some very small regions that do not have many alternatives for entertainment, a large percentage of the local spending can justifiably by included (as import substitution, aka leakage prevention); however, we would not recommend ever including the total local spending value, as not all local residents who attend a game would have been willing to travel outside the region for entertainment had the stadium not existed (they would have just stayed home). We do not recommend the proposed methodology. The best way to account for local attendee spending is to remove it completely or (if you have the data to defend your numbers) include the net portion of local attendee spending with your non-local attendee spending. Regards, IMPLAN Staff

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