Right. Not only that, but reports like these often fail to take into account the substitution effect. That is, they just arrive at a figure for the economic impact of the facility, and then assume that if the facility were closed, then all of that economic benefit would simply disappear.
But, as Johnny L.A. demonstrated quite well in his most recent post, if you suddenly removed Santa Monica airport, it’s not like all that business just disappears into thin air. It just moves elsewhere:
Exactly.
If Santa Monica airport closes, those businesses aren’t just going to throw up their hands and say, “Well, looks like no-one is going to fly anywhere anymore.” They’re going to transport people in different ways, and those different ways will still put money and jobs into the economy.
Yes, this might cause increased traffic, or increased hassle, or increased congestion at LAX. And that would have to be taken into account. But it’s not like all the money being spent at SMO is just going to disappear.
I’m not arguing for or against local airports. I thought it was a great shame when Meigs Field closed. And i don’t know enough about SMO to say anything much about it. I’m just pointing out that studies of economic impact, especially ones that have a particular barrow to push, sometimes stack the deck in their own favor and fail to take account of the substitution effect.
This sort of thing is particularly noticeable in the sports stadium business. Whenever a team wants a new stadium, and/or threatens to leave town, team boosters pile up numbers showing how much money and how many jobs the stadium contributes to the local economy. But just about every independent economic analysis shows that sports stadiums are massively prone to the substitution effect, and that if the stadium is closed (or not built), then people will simply spend their entertainment dollars at some other venue in the city. Instead of going to a ballgame, they’ll go to the movies, or a museum, or a fun park, or whatever.
Studies of the 1994 baseball strike showed that, in aggregate, cities with baseball teams did not suffer at all during the time that baseball was shut down. One economist, a guy named John Zipp, reported that “the strike had little, if any, economic impact on host cities. Retail trade appeared to be almost completely unaffected by the strike” (cited in the Baseball Prospectus book, Baseball Between the Numbers, p. 219). Of course, some individual businesses sometimes suffer. If you own a bar next to the ballpark, you’ll probably be adversely affected by a baseball lockout. But we’re talking here about the big picture for a city or a region, not about one or two particular establishments, and studies generally show that the aggregate impact is negligible.