Economic Impact Analysis: Common Pitfalls
With the advent of EMSI’s affordable, easy-to-use economic modeling tools, many more people are able to conduct economic impact analyses without an extensive background in economics. This document describes some of the basic pitfalls that more inexperienced researchers should avoid when conducting an economic impact study. The three primary pitfalls are:
- Expressing impacts in terms of sales rather than income
- Ignoring the “with and without” principle (also known as the “Broken Window Principle”)
- Failing to account for general equilibrium effects
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