Nary a month goes by in which some government organization – or supposedly “non-government organization” that is connected to government at the hip and suckles at the taxpayer teat – puts forth an economic impact study detailing the manifest benefits of some public project, or a private project in search of taxpayer subsidies.
But as the Allegheny Institute has regularly pointed out over the past three decades, many (most?) of these studies are cooked, filled with flawed assumptions and overstated “multiplier effects.”
Sadly, too many media outlets take economic impact studies at face value, reporting the touted benefits while failing to scrutinize the methodologies used to reach such generally glowing conclusions.
But Denise-Marie Ordway, writing in “The Journalist’s Resource,” notes it is important – we would argue it is critical – for reporters “to note that the quality of economic impact studies can vary as can the level of scrutiny government leaders themselves give to these documents.”
“Sometimes it isn’t until after a project fails to live up to expectations in job creation, tourism growth, business income and property values that elected officials and others question the reliability of these forecasts,” she says.
And if they ever do, they are reluctant to admit their mistake, we would add.
Ordway says reporters must recognize the claims an impact study is making, noticing “what information, if any, is left out of the report. Journalists also need to understand how financial projections are made,” she says.
Here are some fundamental questions reporters should ask when economic impact studies are presented, Ordway says:
- “Where did the numbers come from? Ask the individuals who completed the study to explain how they made their calculations. What are they basing their projections on? What assumptions are they making as part of their calculations?”
- “How have similar proposals fared in other parts of the country? For example, if you’re writing about a county council that is considering allowing an expansion of a local convention center, do a quick internet search to find other counties that have taken on the same issue in recent years. Were convention-center expansions successful in those places? Did they meet the projections outlined in their economic impact studies?”
- “Have the people who did this economic impact study performed studies elsewhere? Check them out. It is important for the public — and public leaders — to know whether these authors have done a good job or a bad job predicting economic impact in other scenarios. Journalists also should read these other studies, if they exist, to look for problems and patterns. Do the studies look very similar even though the projects and circumstances are very different?”
We would add that a major red flag for journalists should be hoisted fast and high if those agencies presenting any economic impact study refuse to share the full report – oftentimes claiming it contains “proprietary information – or make them jump through the hoop of filing a Right-to-Know request to delay full disclosure.
The by-phrase for journalist reporting on any government economic impact studies should be this routine and this simple:
“Question them.”
Colin McNickle is communications and marketing director at the Allegheny Institute for Public Policy (cmcnickle@alleghenyinstitute.org).
