Assignment Zero: Critically Reading Economic Development/Impact Studies

modified: Tuesday, September 20, 2016

Urban Planning 539:
Methods of Economic Development Planning
College of Architecture and Urban Planning
University Of Michigan, Fall 2016
Prof. Scott Campbell (home page)

 

Assignment (+link to assignment page)

 Task Concepts/techniques Unit(s) of analysis Group or Individual Task? assignment posted (or earlier) date due (subject to change) file name for submission Written Format (and suggested page length) Presentation Format ( a link to upload presentation slides) percent of grade
0. Critically Reading ED Studies select an ED study and briefly summarize and critique its methods and measures and techniques of ED studies; evaluation and critique   groups of 2 - 3 students Sep 2 Sep 22 (new due date)   (none) 1-2 slides, brief presentation (3-5 minutes) 0

 

Goals of the Assignment

  • to get an initial understanding of local economic development studies that attempt to measure economic impacts (including costs and benefits), evaluate the effectiveness of development programs, and/or justify public subsidies, etc.
  • to get a sense of the range of methods and data sources used.
  • to identify terminology used in economic development research (e.g., direct vs. indirect impacts; zero-sum game; multiplier; etc.)
  • to provide an initial, informal (and ungraded) practice in reading and critiquing ED studies; you will do this with greater formality and depth for Assignment Four.

Steps of the Assignment

  1. Form groups of 2 - 3 students.
  2. Each group should locate an example of a local or regional economic development study/report. (Examples: an economic impact study; a marketing study; a labor impact study; etc. Ask me if you need help finding something.)
  3. Carefully read and probe the assumptions, methods, sources and conclusions of the study.
  4. Sept 22 (in class): Make a concise, 3-5 minute presentation that summarizes the key question and method of the study, and the strengths and weaknesses of the study. Optional: you may prepare 1-2 slides to aid your presentation. Use this link to upload presentation slides

Here are suggested questions or issues to consider:

  1. What is the purpose (stated or implied) of the study?
  2. Who is the intended audience?
  3. Differentiate between studies that ask a genuinely open question ("Was this program worthwhile and should we refund it for another five years?") vs. studies that seem to be rationalizations (justifications) of decisions already decided ("What are all the benefits of this project that justify its expense?")
  4. Some studies ask a specific question (e.g., will a public-subsidized stadium generate new jobs and revenues?); others ask a broader question (what is the most effective use of public funds to increase local employment and revenues?). Do these two approaches often lead to different results?
  5. How do the studies address time? e.g., short-term vs. long term costs and benefits?
  6. How do they employ discount rates (if at all)?
  7. Does the development attract new residents (from outside the city, or perhaps outside the region) vs. attracting residents from within?
  8. Where relevant, how do the authors use (and make assumptions about) such terms as multiplier, direct vs. indirect vs. induced benefits, etc.
  9. What assumptions do the authors make about larger economic trends (e.g., growth in demand, interest rates, etc.)?
  10. Do the authors clearly explain the sources of data used in the study? Is this data publicly available?
  11. Do they assume new economic activity (i.e., a net gain) when the program/policy/event/etc. might simply shuffle existing activity around (i.e., a zero-sum game)?
  12. Is there evidence of double-counting benefits and/or omitting costs (such as opportunity costs)?
  13. Does the report consider equity impacts? impacts on local residents vs. new arrivals? etc.
  14. Does the report consider environmental impacts?
  15. Note:  examples might include studies of public projects (e.g., infrastructure spending, a new bridge, government research facilities, job training program, etc.) or of public-subsidized private developments (e.g., of a stadium, casino, research park, film industry subsidies, tax increment financing, etc.).  Such studies might look at either the fiscal impact (costs and revenues for governments) and/or economic impact (jobs, wages, R&D investment, etc.).
  16. If you were to do a detailed, rigorous critique of the study (perhaps attempting to replicate the results), what skills, methods or data would you need? Does your preliminary examination of the study (for this class exercise) highlight areas of economic development methods you hope to master? [Since we are doing this brief exercise at the beginning of the semester, many of the terms and methods in the study understandably will be unfamiliar to you. Some of these we will cover throughout the semester, while others may be beyond the scope of this course. These skills will be useful to complete Assignment Four.]

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Terms, Methods, Data Sources often cited:

  • opportunity costs (though often ignored)
  • counterfactual (sometimes ignored; sometimes assumed to be no change in activity)
  • IMPLAN -- a proprietary input-output model.
  • BLS -- Bureau of Labor Statistics
  • ACS -- American Community Survey (from the US Census Bureau)
  • leakage (money “leaking” from the local economy)
  • multipliers
  • FDI - foreign direct investment
  • import-substitution
  • export-based (linked to multipliers)
  • NAHB - National Association of Home Builders
  • LIHTC - Low-Income Housing Tax Credit
  • direct vs. indirect (impact on suppliers) vs. induced (increase in hhd income leading to spending) benefits
  • double counting (e.g., counting the same benefit twice, such as increased business sales and retail spending on the same goods or services).


You might find these pages useful

 

a few background readings to provide examples (see also Nov 29 - Dec 1 for more resources):