Reference
The language of economic impact.
The terms that come up most in economic impact analysis, defined in plain language. For the mathematics behind them, read the methodology.
- Economic impact analysis
- A method for estimating the economic footprint of an organization, project or program: its own spending plus the additional activity that spending sets off across a region.
- Direct effect
- The activity of the project itself: its own spending, wages and jobs.
- Indirect effect
- The activity at the suppliers a project buys from: the vendors, contractors and businesses in its supply chain.
- Induced effect
- The activity created when workers from the direct and indirect activity spend their wages locally: groceries, rent, healthcare and the rest of household spending.
- Total impact
- Direct, indirect and induced effects added together, the headline number, with each layer shown separately so a reviewer can see where it comes from.
- Multiplier
- A factor estimating how each dollar of direct activity ripples into additional activity. Multipliers differ by industry and geography, which is why a casino in Connecticut has a different ripple than a wind farm in Nebraska.
- Regional purchase coefficientRPC
- The share of a good or service a region actually buys locally rather than importing. RPCs estimate how much of each dollar stays in-region versus leaking out to suppliers elsewhere.
- Input-output modelI-O
- The economic framework behind impact analysis: a matrix of how industries buy from and sell to one another, used to trace how spending flows through an economy. Lumecon builds its model from national economic accounts and regionalizes those relationships to the geography being analyzed.
- Base year
- The reference year whose price levels and industry structure the analysis data is anchored to.
- Labor income
- Wages, salaries and benefits paid to workers, reported alongside jobs and output as one of the headline figures.
- Output
- The total value of production (sales or revenue) generated by the activity.
- Jobs supported
- The count of jobs supported by the activity across the direct, indirect and induced layers over the analysis period. It is a job count; where a conversion basis matters, the analysis states it.
- GDP contribution
- The value added by the analyzed activity: the measure that corresponds to a region’s contribution to GDP. Lumecon uses GDP contribution as the plain-language label for value added.
Read how an analysis is built, or ask Cedar (the assistant in the corner) to explain any of these in plain language.