A Lesson in Economic Impact Analysis

Economic impact analysis has grown in popularity in economic development across the country. If you are experiencing difficulty in selling a project, simply commission an economic impact study that demonstrates the project's benefits. That should work, right? Not necessarily.

Having done many of these studies, let me issue an alert on this one. Be careful. The public is smarter than we think. And, an increasing number of news reporters have become "schooled" in the art and science of economic impact analysis. Do not expect your numbers to be accepted without some fight, especially from those on the other side of your argument.

Here is an example from Northern Virginia, which looks at an economic impact study done to show the benefits of the Montreal Expos move to Northern Virginia. The study was completed to justify a public investment in a new ballpark. The value of the article is its pounding on why these studies need to show "net" impacts and not just "total" impacts. It also reminds us that we need to account for difference between spending shifts and new growth.

If you plan to do these studies, please do them right. Go here to read more about what the news had to say. Go here to review the impact study.