Economic Impact Analysis - Multipliers
Methodology  -  Lake State Examples - Other Examples         
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Methodology:

Stynes, D. 2001. Michigan Tourism Economic Impact Calculator. East Lansing, MI: Department of Park, Recreation & Tourism Resources, Michigan State University. http://www.prr.msu.edu/miteim/ Accessed March, 2005.

This is an online tool for calculating the economic impact of tourism in Michigan. The muliplier based tool has three components: statewide, metro areas and rural counties. This is a simplified on-line version of the Michigan Tourism Economic Impact Model (MITEIM), with multipliers estimated using IMPLAN.

Stynes, D. and D. Propst. 2001. Money Generation Model - Version 2. East Lansing, MI: Department of Park and Recreation Resources, Michigan State University. http://www.prr.msu.edu/mgm2/ Accessed March, 2005.

Money Generation Model - Version 2 (MGM2) is a set of Microsoft Excel workbooks for estimating the economic impacts of National Park Service (NPS) visitor spending on a local region. MGM2 is an update of the NPS Money Generation Model as originally developed by Ken Hornback. Like the original MGM model, MGM2 estimates the impacts that park visitors have on the local economy in terms of their contribution to sales, income and jobs in the area. The Money Generation Model produces quantifiable measures of park economic benefits that can be used for planning, concessions management, budget justifications, policy analysis and marketing. Refinements to the MGM model make MGM2 more readily applicable to evaluating management, policy and marketing alternatives, both inside and outside the park. Economic impact information has proven quite helpful in fostering partnerships within the community and garnering support for park policies and interests. The economic analysis also helps to identify the roles the park, local community and tourism businesses play in attracting and serving visitors.

Stynes, D. 1999. Economic Impacts of Tourism. East Lansing, MI: Department of Park, Recreation & Tourism Resources, Michigan State University. Web link.

This paper provides an a review of the field of tourism economic impact analysis. It distinguishes economic impact analysis from other types of economic analysis that might be carried out in tourism research. Specifically, economic impact analysis traces the flows of spending associated with tourism activity in a region to identify changes in sales, tax revenues, income and jobs due to tourism activity. The principal methods this paper identifies are spending surveys, analysis of secondary data from government economic statistics, economic base models, input-output models and multipliers.

Wall, G. 1997. "Scale Effects of Tourism Multipliers." Annals of Tourism Research 24(2):446-450.

This research note discusses the influence of study area definition for the calculation of local economic impacts. Changes in study area boundaries have consequences for the locations of expenditures which are viewed as leakages and for who is to be regarded as a tourist in a particular situation. Thus, for any particular situation, the size of the study are affects both the sizes of multipliers (the larger the study are the large the multiplier) and the definition of who is to be regarded as a tourist and, consequently, the magnitude of gross expenditures to which the multiplier is applied. The latter effect has received limited attention in the literature.

Hughes, H. L. 1994. "Tourism Multiplier Studies: A More Judicious Approach." Tourism Management 15(6):403-406.

This paper argues that while the multiplier has many advocates and, properly estimated and interpreted, it may make a useful contribution to policy making, it should be given much less attention by researchers and and policy makers. The author argues that the multiplier serves to give the wrong emphasis to tourism studies - away from real relationships and interactions, and away from social and cultural matters and the real costs/benefits of tourism and tourism projects and events. Too often the multiplier concept is poorly applied, and even when properly applied, there is such a wide proliferation of different techniques and terminology that is often misinterpreted. The value of the technique may also be severely limited by inadequate data and restrictive and unrealistic assumptions. The author concludes that researchers need to ask themselves whether such studies are really necessary or helpful and examine the reasons why they carry them out.

Wanhill, S. 1994. "The Measurement of Tourism Income Multipliers." Tourism Management 15(4):281-283.

This paper addresses the issues of personal taxation and social insurance contributions and there relation to income multipliers. It demonstrates that the state at which they are deducted as leakages can have very different effects on the resulting multiplier values. Some researchers use national income accounting concepts, in which case the income multipliers are estimated gross of direct taxes and social insurance contributions, while others deduct these items at sources, as they are normally collected for the government by firms on behalf of their employees. The latter method results in the estimation of tourist disposable income multipliers. On balance it is argued that the first methods is to be preferred since the second procedure is, in essence, attributing taxation to the corporate sector, which does not accord with the practices of national income accounting.

Hustedde, R., R. Shaffer and G. Pulver. 1993. Community Economic Analysis: A How to Manual. Revised Edition. Ames, IA: North Central Regional Center for Rural Development.

This how to manual brings together a variety of techniques that can assist an individual in analyzing a community's economy. The manual is presented in an easy to read format. A series of questions are posed to understand why a particular method might be used, how it is used, and how its results can be interpreted. In addition, there are examples which illustrate each method. The methods which are presented include: multipliers, trade area analysis, location quotients, and shift share analysis. There is a discussion of economic development strategies as well which places the use of these techniques in context.

Fletcher, J. E. and B. H. Archer. 1991. The Development and Application of Multiplier Analysis. Progress in Tourism, Recreation and Hospitality Management: Volume 3. C.P. Cooper (ed.), New York, Belhaven Press: 28-47.

This book chapter covers the concept of the multiplier and its use in tourism research. It outlines the concept of the multiplier and provides the following definition "multiplier refers to the ratio of the change of [output, income, employment, government revenue or foreign exchange flow] to the change in the final demand which brought it about." The historical background of the multiplier is examined and both the methodology of ad hoc models and input-output analysis are examined.

Milne, S. S. 1987. "Differential Multipliers." Annals of Tourism Research 14:499-515.

This paper presents a modified multiplier model to estimate the economic impact of the tourist industry on the Cook Islands and ancillary sectors. The analysis is conducted at both the sectoral and firm scale. The latter analysis is shown to be important as characteristics such as size and ownership can have a differential impact. The results reveal that smaller, locally owned establishments generate more local income, employment and gross government revenue than their larger, overseas controlled counterparts. The model adopted in this study is shown to have promise as a surrogate to the conventional input-output model.

Archer, B. H. 1977. Tourism Multipliers: The State of the Art. Bangor, University of Wales Press.

This is an oft cited publication on the theory, method and application of multipliers to tourism. Three types of multiplier models are detailed: economic base models; Keynesian-based models and input-output analysis, which is based on the work of W. Leontief. The author bemoans the fact that multipliers, which are increasingly being used in tourism research, are poorly applied and often by practitioners without proper understanding of the method.

Archer, B. H. 1976. "The Anatomy of a Multiplier." Regional Studies 10:71-77.

This paper explores the three most common methods of generating income multipliers. The author argues that the "unorthodox" method, which uses a ratio of the total income generated to a unit of the initial injection is the most appropriate and most useful for policy makers. A simple tourist regional multiplier model is developed using this definition of a multiplier and applied to regions in England.

Lake States Examples:

Stynes, D., G. A. Vander Stoep and Y.-Y. Sun. 2004. Economic Impacts of Michigan Museums. East Lansing, MI: Department of Park, Recreation & Tourism Resources, Michigan State University. Web Link.

This study estimates the economic impact of Michigan museum visitors on Michigan communities, the statewide economic significance of museums including both visitor impacts and museum expenditures, the portion of the impact attributable to museums and the percentage related to tourism in general, and estimate the total spending by museum visitors both inside the museum and in the local community. Two surveys, a census of museum administrators and a visitor survey, were used to collect expenditure data that was analyzed using the Michigan Tourism Economic Impact Model (MITEIM). The study finds that almost 60% of the economic impact of visitors to Michigan communities would be lost without the museums, and the total economic impact (direct and indirect) on Michigan's economy of having the museums is found to be 15,000 jobs and $331 million in wages and salaries.

Stynes, D. and Y.-Y. Sun. 2003. Impacts of Visitor Spending on Local Economy: Pictured Rocks National Lakeshore, 2001. East Lansing, MI: National Park Service, Department of Park, Recreation and Tourism Resources, Michigan State University. Web Link.

This study uses the National Park Service Money Generation Model - Version 2 (MGM2) to estimate the economic impact of visitors to the Pictured Rocks National Lakeshore on the local economy. In 2001 there were 421,000 recreation visits which resulted in expenditures of $14.8 million dollars in the local area (within 60 miles), $4.6 million in direct income and 426 jobs. The sales multiplier for Alger county is 1.24 which means that these expenditures generated an additional 44 jobs, about $979,000 in personal income and $1.8 million in expenditures as secondary impacts.

Fulton, D. C., W. C. Gartner, L. L. Love and D. Erkkila. 2002. Economic Impact and Social Benefits Study of Coldwater Angling in Minnesota. St. Paul, MN: Tourism Center, University of Minnesota Extension Service; Minnesota Cooperative Fish and Wildlife Research Unit. Web Link.

A staggered mail back design instrument was used to collect detailed data, based on the recipients most recent coldwater angling trip, on expenditures and benefits received for anglers fishing in each of five different resources: streams year round; Lake Superior by boat; Lake Superior shores and streams; inland lakes in winter; and inland lakes in spring, summer and fall. Using the expenditure results of the survey (approximately $105 per person per day) and regional multipliers a total economic impact was calculated of between $140.7 to $156.7 million in direct sales. $85.5 to $95.2 million in income, and 3128 and 3,482 full and part time jobs.

Stynes, D. 2002. Economic Impacts of the Grand Rapids Art Museum on the Local Economy; The Leaded Glass of Frank Lloyd Wright Exhibit. East Lansing, MI: Department of Park, Recreation & Tourism Resources, Michigan State University. Web Link.

The study estimates visitor spending and economic impacts on the Grand Rapids area economy of the Leaded Glass of Frank Lloyd Wright Exhibit which ran in the Grand Rapids Art Museum. The exhibit attracted 13,800 visitors - 45% were local residents, 35% were day trippers from outside of the county and 16% were overnight visitors. Half the overnight visitors stayed in local hotels or B&Bs. Visitor spending (all types) yielded approximately $581,000 in personal income and 32 jobs in direct and secondary impacts.

Stynes, D. and Y.-Y. Sun. 2001. Economic Impacts of Michigan Downhill Skiers and Snowboarders, 2000-01. East Lansing, MI: Department of Park, Recreation & Tourism Resources, Michigan State University. Web Link.

This study evaluates the economic impact of downhill skiers and snowboarders on the Michigan State economy and local county economies. Using a regionally stratified sample of skiers at Michigan downhill ski areas, a manager survey of Michigan downhill ski areas (this survey had a poor response rate), a simple linear regression model to predict visits to Michigan ski areas and the Michigan Tourism Economic Impact Model, statewide and local economic impacts were calculated. The study found that skiing and snowboarding generate approximately $84 million in direct and indirect income impacts and close to 4,900 jobs. The total impact of a "typical" downhill ski area is close to $4.5 million in personal income and 383 jobs.

Stynes, D., Y.-Y. Sun and D. R. Talhelm. 2000. Michigan Golf Tourists - Economic Impacts. East Lansing, MI: Department of Park, Recreation & Tourism Resources, Michigan State University. Web Link.

This study evaluates the economic impact of golf tourists on the Michigan State economy in 2000. Date from a spending survey of golfers and a survey of golf course managers to estimate rounds of golf in 2000 was combined in the Michigan Tourism Economic Impact Model to estimate total spending and the economic impacts on state and local economies. Total economic impact to the Michigan economy is significant with golfers generating almost $400 million income and almost 24,200 jobs with their spending. Of that, approximately $158 million of the income impact was the result of "travel rounds" (greater than 60 miles from home).

Stynes, D. 1999. Economic Impacts of Tourism in the Eastern Upper Peninsula. East Lansing, MI: Department of Park, Recreation & Tourism Resources, Michigan State University. Web Link.

This study looks to provide a comprehensive estimate the economic impact of tourism activity for the Eastern Upper Peninsula in Michigan. Significantly the study includes the impact of trips to seasonal homes. The total economic impact is estimated using a custom model and secondary data from the IMPLAN system. With multiplier effects accounted for tourism spending generated $162 million in income and supported over 7,500 jobs in the region in 1995. This was a significant increase over 1995, due in large part to growth in casinos in Chippewa and Mackinac counties. Tourism spending accounts for 18% of all income in the region and over a fourth of all jobs. About one fifth of all tourist spending is by seasonal home owners.

Stynes, D. 1998. State and Regional Economic Impacts of Michigan State Park Visitors. East Lansing, MI: Department of Park, Recreation & Tourism Resources, Michigan State University. Web Link.

This study estimates the the economic impact of visitors to the Michigan State Park system. Using a model with regional multipliers derived from IMPLAN the total economic impact of visitor spending is estimated at $118 million in direct income and $261 million in income when the multiplier effect is considered. Out-of-state park visitors account for approximately 34% of total spending generated by the park system which generated $44 million in direct income to the tourist industry and almost $100 million when multiplier effects are considered.

Strang, W. A., D. L. Funk and M. M. Onofrio. 1997. Economic Impact of the University of Wisconsin System. Madison, WI: Bureau of Business Research, School of Business, University of Wisconsin.

Unlike previous studies undertaken by the same author, this study examined the entire UW System rather than the impacts of one campus. The study looked at short-term and long-term impacts to the state economy. In order to carry out this analysis, data was collected, other studies assessed and previous multipliers were used from a 1985 study when necessary. The study was divided into two large chapters, one chapter dealt with the effects on the Wisconsin economy and the other chapter dealt with the value of a UW education. According to this study, the UW system represents a major economic force with an annual impact of $8.2 billion on the state economy and resulting in 145,000 jobs not including the jobs within the UW system.

Strang, W. A. and M. Puri. 1996. Economic Impact of the Kohl Center on Dane County Economy. Madison, WI: Bureau of Business Research, School of Business, University of Wisconsin.

According to this study, the Kohl Center will have a significant impact on the economy of Dane County. This study used a multiplier method to estimate total new income and jobs in the economy. The economic multipliers that were used are from earlier UW impact studies. During the construction phase of the Kohl Center, the study estimated a total economic impact of $147 million and a total of 700 jobs supported over the two year period. Once fully operational, the Kohl Center was estimated to generate $56.6 million in annual economic activity and to support about 750 jobs each year.

Sumathi, N. R. and D. Berard. 1992. Lac Courte Oreilles Honor the Earth Pow-Wow: An Informational and Economic Analysis. Madison, WI: The Center for Community Economic Development, Univeristy of Wisconsin-Extension.

Honor the Earth Pow-Wow dates to 1973 as an annual event of the Lac Courte Oreilles Tribe. Little was known about the economic impact of this event to the area. This report had three objectives: "to assess the economic impacts on Lac Courte Oreilles and the broader surrounding area; to gather information related to participants' interests and activities while attending the Honor the Earth Pow-Wow; and to gather source demographic information on participants for use in future planning, organizing, and promotional efforts." The study found that with 5,000 visitors to the area and average party expenditures totaling $205.37, the economic impact was estimated at $316,328. An conservative local income multiplier of 1.3 was used to measure direct and indirect economic impacts.

Other Examples:

Stynes, D. and Y.-Y. Sun. 2002. Economic Impacts of Selected National Parks; Update to Year 2001. East Lansing, MI: Department of Park, Recreation & Tourism Resources, Michigan State University. Web Link.

This study estimates the economic impact for thirty National Park Service (NPS) units using the Money Generation Model 2 (MGM2) model. The model estimates visits and spending within four NPS visitor segments: locals, non-local day trips, and overnight stays in motels or campgrounds. The model is based on visitor data from surveys and expert judgment of managers. Multipliers in the model were base on input-output models for regions around NPS units using the IMPLAN system.

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