Hospitals: Considerations when Conducting Hospital Economic Impacts

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INTRODUCTION:

Hospitals can pose an interesting case for IMPLAN analysis. Many are large institutions with immense buying power.  But even the smallest of hospitals are anchor institutions, rooted in our communities and unlikely to close or move.  

Hospitals will be classified differently in IMPLAN depending on their legal status and how they operate. They also may have facilities that fall under more than one IMPLAN Sector. 

Across the United States in 2017, hospitals accounted for 2.5% of total Output and 2.6% of total Employment. Hospital services were split between the Hospital Sector (76.981%) and State/Local Government Non-Education (23.019%).  This means that about ¾ of hospitals across the country are privately held or are nonprofits, while ¼ are run by state and local governments. This data can be found for your study area on the Regions screen by navigating to 

Social Accounts > 

     Balance Sheets > 

          Commodity Balance Sheet > 

               Industry-Institutional Production 

and then using the Filters button to choose your Commodity of interest.  In this case, we used Commodity 3482 – Private Hospital Services.

Hosp_Intro_-_IxI.jpg

CHANGE IN DEMAND FOR HOSPITAL SERVICES:

We know from the Industry-Institutional Production information that the Commodity 3482 – Private Hospital Services is produced by both private Hospitals and State/Local Government Non-Education. If there was an increasing population and we wanted to model that change in demand for hospital services, we might not know what combination of private, nonprofit, or public  (government) hospitals will absorb the new influx of patients. In this case, running a Commodity Event would be the best option.  

SECTOR CONTRIBUTION:

Analysts may want to examine the entirety of the hospital industry.  In this case, the best method would be to conduct an Industry Contribution Analysis (ICA). ICA removes buybacks to the Sector(s) of interest and more accurately represents the true contributions of the Sector at the current level of production.

CONSTRUCTION OF HOSPITALS:

Hospitals invest significantly in construction projects and this construction differs greatly from building a new house or highway; therefore hospital construction spending should be modeled through IMPLAN Sector 52 – Construction of new health care structures.  Major improvements and renovations to hospitals should be modeled through IMPLAN Sector 62 – Maintenance and repair construction of nonresidential structures.  

All construction Sectors in IMPLAN exclude Furniture, Fixtures, & Equipment (FFE).  FFE consists of movable furniture, fixtures, and other equipment that is not directly attached to a building. Specialized medical equipment is also not included and therefore should be modeled separately.  

Additionally, any land purchases are not included in IMPLAN as the sale of the land has very little impact on the economy. The purchase of the land necessary for a construction activity should not be included as Industry Output for the construction sectors because land sales are considered asset transfers, where one person receives money while the other receives tangible property.  Thus, the land sale itself has no value in IMPLAN. Some small impact may be captured however, by creating an Event for real estate fees, and for large commercial projects legal fees.

OTHER HOSPITAL SERVICES: 

Hospitals may provide care beyond services that fall under Sector 482 – Hospitals.  For example, they may have on site home health care agencies (Sector 480 – Home health care services) or ambulance services (Sector 481 – Other ambulatory health care services).  Each of these functions should be modeled separately.

As with any type of analysis in IMPLAN, the more details you have available as the analyst, the more accurate the results.  You may have to split out a nonprofit hospital from its privately held ambulance service. Also, you may consider separately modeling the doctor and technician offices that are located on hospital grounds.  Each different function, which will fall under a different IMPLAN Sector, should be modeled as its own Event (of group of Events) so that the results can be examined for each of the business functions of the hospital.  

Physicians owning their own private practice are often sole proprietorships (LLC or S-Corp).  These sole proprietorships can be paid in different ways depending on the hospital; some might be considered wage and salary employees while others are contractors. Be careful not to double count the spending on these doctors in your analysis.

CAUTIONS:

Deciding what to include and what to exclude in your hospital economic impact analysis can be a very delicate balancing act.  While you may choose to include certain associated Sectors with your hospital impact, do not fall into the trap of adding every Sector that exists in the hospital supply chain.  Incorporating too much not only dulls the focus on the actual impact of the hospital, but it also lowers the credibility of the entire study.

You may want to assume that but for this hospital, there would be no regional impact in the Sector.  However, consider that other entities might expand or open facilities in the absence of the one you are modeling.  

COMMUNITY & HEALTH BENEFITS:

In order to model a real-life event in IMPLAN, the initial economic effect in terms of a spending or production change, needs to be determined. Some circumstances require additional assumptions by the analyst before modeling. 

A few extra steps may be necessary to determine the economic effect of a real-life event including socio-political impacts, environmental impacts, policy changes, price changes, forward linkages, and feasibility analysis.

Modeling tax impacts, like a change in Medicare or Medicaid benefits, falls under the umbrella of socio-political impacts.  Therefore, the spending behavior associated with the tax impact/change would need to be determined by the analyst before it can be modeled in IMPLAN.  These government policies can affect citizens in many different ways. For example, if a policy is enacted that decreases health care rates, households may spend the money that would have been spent on health insurance on something else. 

Another modeling consideration is the savings the hospital might see by decreasing emergency room visits in favor of encouraging patients to seek preventative care and health screenings.  The cost differential between the primary care and emergency care could be modeled as a cost savings to the hospital.

A final consideration is potential savings to companies for healthier employees.  Fewer sick days and lost productivity could be modeled. Additionally, the ability to work additional years might be modeled as productivity increases.

RELATED TOPICS:

Hospitals: Modeling Private Hospital Impacts with Analysis-by-Parts

Hospitals: Modeling Public & NonProfit Hospital Impacts with Analysis-by-Parts

ABP: Introduction to Analysis-By-Parts

CASE STUDY:

The Economic Impact of Mayo Clinic: Now, Then & All Points in Between

College: Modeling Public College & University Impacts

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INTRODUCTION:

After reviewing Considerations when Conducting College & University Economic Impacts, you are ready to examine the economic impact of your public college or university. Public colleges and universities are vital to not only the education system, but also to our regional and state economies and this article outlines how to model their expenditures.  

Public colleges and universities contribute to local economic activity via different pathways, each of which ought to be evaluated separately for a robust economic impact study that best captures all the effects. The best way to model these impacts is through Analysis-by-Parts (ABP). In this example, we will use the Bill of Goods (BoG) approach and show spending across five categories: university operations, university labor, student spending, visitor spending, and capital expenditures.  Each school is unique, so each university impact can include any or all of these parts.  

 

THE PROCESS:

In this example, we will be studying our fictitious school,  Leontief State University.  It was named in honor of the father of Input-Output analysis, nobel prize winning economist Wassily Leontief.  LSU is located in Amherst, Massachusetts and we want to examine its impact on Hampshire County. 

STEP 1 – OPERATIONS EXPENDITURES

To begin modeling the impacts of operations expenditures, we will first examine the non-labor budget. In this example we will look at three example industries.  When modeling an actual university, there will likely be many more affected Industries. The budget information we know for Leontief State University is: 

Public_College_-_Table_1_Operations_Spending.jpg

For each of the expenditure categories, create a new Event. For each Event, choose Industry Output, then select the appropriate sector as the specification. Finally, enter the value of expenditures in that category. 

We recommend that you save your work after each new section of data is entered.

Public_College_-_Events_Screen_1.jpg

SECTOR 473 TRAP:

Unfortunately, there is no IMPLAN sector for public colleges and universities. The sectors in the IMPLAN sectoring scheme are limited to Private Sectors, Government Enterprises, or unique Government Institution “Sectors” that do not include spending patterns. Don’t fall into the trap of Sector 473 – Junior colleges, colleges, universities, and professional schools.

All public education, including K-12 schools through college, are captured in the Institution for State/Local Government Education. Standard Government Institutional activities are not part of the sectoring scheme and thus public colleges and universities are not represented in the Sector listing. This is because Government Institutions don’t have production functions or Multipliers.  Specifically, there is no direct relationship between sales and production for Government Institutions since they derive revenue from collected tax dollars and not sales. Public entities, including colleges and universities, require a different approach to measure impacts.

CONSIDERATIONS:

  • You can choose to model the effect of Commodity purchases rather than Industry purchases
  • You can enter as many events as you have line items in the budget you are modeling
  • Remember to apply margins as necessary
  • Also, remember to adjust the Local Purchase Percentage (LPP) as necessary; only local purchases should be included

ALTERNATE APPROACH:

An alternative approach, as opposed to modeling each Intermediate Expenditure through a Bill of Goods approach is to run the total Intermediate Expenditures value through the Institutional Spending Pattern that best reflects the industry you are modeling; in this case, State/Local Govt Education.  

However, the Institutional Spending Pattern for State/Local Govt Education also encompasses primary and secondary schools in addition to colleges.  Because of this, you may want to consider using the private sector as a proxy. In this case, choose Sector 473 – Junior colleges, colleges, universities, and professional schools. For more information on this approach, follow the instructions for Analysis-by-Parts: Using an Industry Spending Pattern Event with Labor Income Event(s).

STEP 2 – LABOR EXPENDITURES

Since labor costs were not modeled as a part of the school’s operations expenditures in Step 1, we will have to model them independently. Let’s say that Leontief State University tells us that Labor expenditures sum to $50 Million. To analyze this impact, we create a new Labor Income Type Event, with a specification of Employee Compensation, and a Value of $50 Million. This is entered on the same Events screen as the three Industry Output Events.

CONSIDERATIONS:

  • These should be fully loaded payroll values which include wage and salary, all benefits (e.g., health, retirement) and payroll taxes (both sides of social security, unemployment taxes, etc.)
  • If the University’s employees commute into the study area for work, then they should not be included in the Labor Income Event

STEP 3 – STUDENT SPENDING

Personal spending by students on non-college goods and services (like the classic textbook Input-Output Economics (Leontief, 1966) and Moscow Mules) will also have an impact on the local economy. To estimate these impacts, we will need to know how much they spend on personal items and which items they purchase. These can then be modeled by adding expenditures to an additional Industry Output Event, with the appropriate Specification.  Some considerations on what to include in student spending are outlined below. Additional details on outlining student spending can be found in Surveying for Input-Output.  Some items to consider including are:

  • Books
  • Transportation
  • Food & beverages
  • Alcohol
  • Recreation & amusement
  • Retail

At Leontief State, we know the average student spends according to the following table. With actual survey data, you will likely have more spending categories.  

We also know that LSU has 12,000 total students.

Public_College_-_Table_2_Student_Spend.jpg

STEP 4 – VISITOR SPENDING

Personal spending by visitors on non-college goods and services (like hotels, transportation, and restaurants) will also have an impact on the local economy. To estimate these impacts, we will need to know how much they spend on personal items and what they purchase. These can then be modeled by adding expenditures to an additional Industry Output Event, again with the appropriate Specification.  Remember, visitors will not spend their money in the same was as a college student. Consider spending categories such as:

  • Lodging 
  • Transportation to the city
  • Transportation within the city
  • Gasoline
  • Food & beverages
  • Retail
  • Recreation & amusement

From a visitor survey, we are given the following information from Leontief State for their estimated 25,000 annual visitors.

Public_College_-_Table_3_Visitor_Spend.jpg

STEP 5 – CAPITAL EXPENDITURES

If in addition to its operations, the college or university supported other economic activity in the region because of new campus construction projects (note that general maintenance and repair are part of the operational spending pattern), you can model the effects of these activities as well. This analysis can be done by adding expenditures to an additional Industry Output Event, with the appropriate Specification.

College impacts often have associated capital expenditure layouts that it may be desirable to consider within the analysis. When looking at these expenditures there are some important things to keep in mind.

  1. Typically investments in buildings and equipment are temporary in nature. While the building and equipment will continue, the actual expenditures on these items tend to be one time or of a short-term, non-recurring nature, as opposed to be year-over-year expenditures. Thus it is important that we distinguish these impacts from those that are recurring.
  2. For Furniture, Fixtures, and Equipment (FFE) or other major equipment purchases, it is important to consider if the purchase is from a manufacturing sector or if the purchase is actually through a wholesaler or retailer, as these will affect how FFE is modeled. In addition to this, if the equipment is not produced in the region of the model, it may be good to report on that expenditure, but not include it’s value in the modeling process.

For example, LSU just opened up a state-of-the-art new College of Statistics at a cost of $50M.  We can run this through an Industry Output Event in Sector 55 – Construction of new educational and vocational structures.  

Our Event screen now is fully populated with all of the information we have from LSU. When creating a long list of Events as in this example, give each a name that is easy to remember so that using the FILTERS button on the Results screens is straightforward.

Public_College_-_Events_Screen_3.jpg

STEP 6 – RUN THE IMPACT

Now either use the button at the top to select all or highlight each Event and drag them into your Group.  Next, hit run.

Public_College_-_Groups.jpg

STEP 7 – ANALYZE THE RESULTS

The results will show you the economic impact of all of the Events you entered which will include the Industry Events and the Labor Income Event. To look at the results by Event, use the FILTERS button and select which of the Events you would like displayed.  For example, choosing all three Operations Events and the Labor Event will filter the results to only include the economic impact of the university operations.  

University operations are yearly impacts.  Construction impacts occur only once. Therefore, we recommend that these are not reported together.  Remember to clearly label your tables and figures so readers have a clear understanding of your results.  

Total 2019 Operations Impact of Leontief State University on Hampshire County, Massachusetts

Public_College_-_Results_Operations.jpg

 

Total 2019 Capital Impact of Leontief State University on Hampshire County, Massachusetts

Public_College_-_Results_Capital.jpg

 

RELATED TOPICS:

Considerations when Conducting College & University Economic Impacts

Modeling Private College & University Impacts

Surveying for Input-Output

Tourism Spending

CASE STUDY:

Economic Impacts of California State University Northridge: How One University Campus Discovered Its Economic Significance

College: Modeling Private College & University Impacts

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INTRODUCTION:

Now that you have read Considerations when Conducting College & University Economic Impacts, you are ready to examine the economic impact of a private college or university.  Private colleges and universities spend and save money in a very different manner than their public counterparts. Remember, each school is unique, so the more details that you enter in the model, the more accurate the results.

The goal of this article is to be a guide in framing your private college impact study.  Spending can be split across operations, university labor, student spending, visitor spending, and capital expenditures.  

 

THE PROCESS:

For this example, we will be looking at Input Output University (IOU), a four-year liberal arts school known worldwide for their advanced economic theory program.  They are located in Huntersville, NC in Mecklenburg County. We know that IOU spends $120 million in annual operating costs.  

STEP 1 – OPERATIONS EXPENDITURES 

If only total operations expenditures for the university are known, the total can be run through Sector 473 – Junior colleges, colleges, universities, and professional schools.  This Sector includes all private colleges and universities while excluding all public institutions. Note that some specialty, business, and technical schools are actually included in Sector 474 – Other educational services.

Private_College_-_Table_1_Operations.jpg

ALTERNATE APPROACH:

If detailed spending information is available, the same steps in Modeling Public College & University Impacts can be followed using the Bill of Goods approach.

STEP 2 – LABOR EXPENDITURES

Since labor costs were not modeled as a part of the school’s operations expenditures in Step 1, we can add this information to our Industry Output Event. IOU spends $90 Million on salaries and benefits to their 1,200 employees (note this was not included in the $1.2 million operations figure).  We can add the Employment, Employee Compensation, and zero out the Proprietor Income as there is no ownership entity for IOU.  

Private_College_-_Labor_Event.jpg

CONSIDERATIONS:

  • These should be fully loaded payroll values which include wage and salary, all benefits (e.g., health, retirement) and payroll taxes (both sides of social security, unemployment taxes, etc.)
  • If the University’s employees commute into the study area for work, then they should not be included in the Labor Income Event

STEP 3 – STUDENT SPENDING

Personal spending by private school students on goods and services (outside of tuition and fees paid to the school) will also have an impact on the local economy. To estimate these impacts, we will need to know how much they spend on personal items and what they purchase. Additional details on outlining student spending can be found in Surveying for Input-Output. Examples of potential spending categories include:  

Student Spending

  • Books
  • Transportation
  • Food & beverages
  • Alcohol
  • Recreation & amusement
  • Retail

IOU has 5,000 students and their yearly spending is outlined as follows: 

Private_College_-_Table_2_Student.jpg

STEP 4 – VISITOR SPENDING

Colleges and universities welcome sporting event spectators, patrons of the arts, parents, siblings, and prospective students to campus as visitors.  The spending by these visitors can be captured via survey and used as inputs in the model by adding expenditures to an additional Industry Output Event.  Consider spending categories such as:

  • Lodging 
  • Transportation to the city
  • Transportation within the city
  • Gasoline
  • Food & beverages
  • Retail
  • Recreation & amusement

IOU estimates that 15,000 total guests visit each year, for an average of two days,  and estimates their spending as follows:

Private_College_-_Table_3_Visitor.jpg

STEP 5 – CAPITAL EXPENDITURES

Often times, colleges and universities also like to show their economic impact in terms of large-scale construction projects.  IOU just opened a brand new dormitory at a cost of $2.1 million. This can be entered as an Industry Output Event in Sector 60 – Construction of new multifamily residential structures.  

Now we have a complete picture of IOU’s direct spending as shown below.  Remember to give each of your Events a memorable name so that using the FILTERS button on the Results screen is seamless.

Private_College_-_Events_Screen.jpg

STEP 6 – RUN THE IMPACT

Now either use the button at the top to select all or highlight each Event and drag them into your Group.  Next, hit run.

Private_College_-_Groups.jpg 

STEP 7 – ANALYZE THE RESULTS

The results will show you the economic impact of all of the Events you entered which will include the Industry Events and the Labor Income Event(s). If you want to look at the results by Event, use the FILTERS button and select which of the Events you would like displayed.  For example, choosing all three Operations Events and the Labor Event will filter the results to only include the economic impact of the university operations.  

Total 2019 Operations Impact of Input Output University on Mecklenburg County, North Carolina

Private_College_-_Operations_Impact.jpg

Total Impact of Input Output University 2019 Dormitory Construction on Mecklenburg County, North Carolina

Private_College_-_Capital_Impact.jpg

RELATED TOPICS:

Considerations when Conducting College & University Economic Impacts

Modeling Public College & University Impacts

Surveying for Input-Output

Tourism Spending

 

CASE STUDY:

Economic Impacts of California State University Northridge: How One University Campus Discovered Its Economic Significance

College: Considerations when Conducting College & University Economic Impacts

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INTRODUCTION:

Examining the impact that a college or university has on a region is a common use case in IMPLAN, but the potential complexities warrant careful consideration when setting up and framing the study. The goal of this article is to help guide you in correctly framing your analysis and to increase awareness of some of the special considerations of college and university analyses.

 

CAPTURING NET NEW EFFECTS:

When considering our Study Area geography, a question can arise about the importance of where the funding originates when it differs from the location where the funds are spent.  

In IMPLAN, we are interested primarily in how and where money is spent, not its source. As long as we know that the money is new to the Study Area, we can consider these funds to create a measurable impact.

The idea of what new money is, however, can become more challenging when residents spend money on sporting events, conventions, fairs and other transient events, this spending is considered substitutive rather than new money to the region. This is an important designation because it means that rather than truly supporting economic change and growth in a region, resident money is simply shifting from one local venue to another. Resident spending only has a true ‘new’ impact in cases where the event draws out spending that would normally be saved.

In the context of college student spending, generally resident students aren’t counted. While they may have some short term impacts while setting up new households, the general spending they represent in the economy is not likely to significantly change beyond those one-time purchases. Why? The increase in their daily spending is offset by a decrease in their parents local spending.

When would this rule not apply? If you can make the argument that your university, college, or program is unique and thus kept the students from leaving the region. This creates a theoretical ‘new’ spending circumstance. Examples of this might be having a medical degree program or being a religious college. With these sorts of specializations an argument can be made that the students would have left the region but for these local programs.

If the goal is to see how a college or university fits within the regional economic ecosystem or no information on net new money is available, consider performing an Industry Contribution Analysis (ICA).  ICA can be used to estimate the relative extent and magnitude of an existing institution in the study area.

 

LIFETIME EARNINGS & LOANS

While we do not recommend looking at forecasting the prospective value of college student’s education on their economic potential, IMPLAN has been used as a factor in some of these scenarios. If you are looking at projecting earning potentials of students, please keep in mind the effects of loans. These loans must be paid back and thus reduce the earning potential of students and their ability to create effects on the local economies where they live. Some other caveats to consider if you are looking at these types of impacts are:

  1. Will students actually receive job placements in their target degree area, and how long will it take them to get the experience needed to get these jobs?
  2. How much of their increased earning is attributable to this degree, especially if their job is outside of their field or they go on to graduate school?
  3. Will the student remain in the region after receiving training?
  4. What percentage of students remain long-term in their degree field?
  5. How many open positions or places for advancement are available and are these accounted for within the calculation for potential future income generation?

 

DOUBLE COUNTING:

Impacts that involve multiple stages, like many college impacts, can easily incur scenarios for double counting. For instance, spending on tickets for sporting games may be a separate impact, but those ticket funds may also be accounted for as part of the college’s operations budget. Likewise, tuition covered by scholarships that are provided by the school creates no additional impacts because these are already accounted for in the college’s budget.  

It is important then, when framing the impact to consider where funds are captured. The total college operations budget should include all sources of revenue. Tuition is obviously captured here, but, depending on the school and the services or programs it offers, funds coming in from on-campus sporting events (such as ticket and drinks sales), campus owned bookstores, college owned dormitories, and college meal plans could also be sources of double-counting if they are also captured as part of student spending.

 

OPERATIONS AND CAPITAL IMPACTS

University operations are yearly impacts.  Construction impacts occur only once. Therefore, we recommend that these are not reported together.  There are two main reasons that we recommend that you do not report operations impact and capital impact together.  

  1. People love job numbers. It is not uncommon for studies that report rolled up construction and operational impacts to have job numbers that mix both temporary and ongoing Employment picked up and reported by others as the recurring Employment impact. This is one source of the idea that Input-Output Analysis studies overestimate impacts.
  2. The same principles apply to other economic factors as well. The Labor Income, Value Added and Output of the construction are occurring only over a short period of time and thus have a more limited impact than operational changes. This is best reflected when the two types of impacts are handled separately.

 

PUBLIC VERSUS PRIVATE SCHOOLS: 

There are many factors for the analyst to consider when modeling any institution of higher learning. Most importantly, public and private colleges and universities will follow very different spending and additionally will attract different students and visitors. The sheer size of some large public universities will lend them to have immense overall budgets. They also might see large influxes of visitors in town for a playoff game. Alternatively, universities that focus heavily on research tend to invest in the sciences as well as research and development activities and may not offer any sports programs.  Small fine arts schools might be more selective but have talented and famous alumni network that generously subsidizes their capital budget. Knowing the details of each school will ensure that the analysis is accurate and defendable. For details on the specifics on public and private college and university impacts, visit the pages below.

 

RELATED TOPICS:

Modeling Public College & University Impacts

Modeling Private College & University Impacts

Surveying for Input-Output

Tourism Spending

 

CASE STUDY:

Economic Impacts of California State University Northridge: How One University Campus Discovered Its Economic Significance

Casinos: Acing the Impact

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INTRODUCTION:

Casinos and the gambling Industry are unique in IMPLAN and don’t follow a single Sector.  This article outlines a few considerations to bet on when modeling them.

 

THE GAMBLER:

One thing to keep in mind when thinking through casino impacts is that Output for casinos is revenue net returns to the gambler.  That means that the casino Output already excludes all of the payments made to those that walked away winners. This is total revenue less losses to the house. Your Output value may need to be adjusted to reflect that definition. 

 

CORNER POCKET:

Sometimes what seems like gambling, may be considered basic amusement.  Remember to check the IMPLAN Sectors or the NAICS codes to ensure that you are capturing the Industry you want to model.  For example, IMPLAN Sector 496 – Other amusement and recreation industries includes billiards and pool halls while Sector 490 – Racing and track operation covers dog and horse racing tracks.

 

NUMBERS GAME:

Running a basic casino through IMPLAN can be done through Sector 495 – Gambling industries (except casino hotels).  This assumes, however, that the only activity in the facility is gambling. Many modern casinos operate a few businesses under one roof; restaurants, retail, and hotels.  Splitting out the operations of each entity is the best way to model a casino with multiple businesses.

Following the definition of the BEA, IMPLAN separates the different business functions of both Sector 503 – Gambling industries (except casino hotels) and Sector 507 – Hotels and motels, including casino hotels (546 Sectoring scheme).  These are divided between  

  • Construction
  • Retail
  • Real Estate
  • Performing Arts
  • Gambling
  • Amusement
  • Hotels
  • Personal Services

The casino’s business may match multiple IMPLAN sectors and should be distributed appropriately.  Note that some entities within the hotel may actually operate as separate businesses. For example, a casino may contain a chain restaurant that would not be included in the Output for the casino.

 

ATLANTIC CITY TO YAVAPAI:

Gambling is not legal everywhere in the US.  Therefore, when you are trying to model it in your region, it may not exist.  You can borrow the Output equation from a comparable region or the national model as outlined in the article Adding an Industry by Customizing a Region or Adding an Industry that Doesn’t Exist Yet.

Also, a state may be drastically changing their laws.  For example, they could currently have a state lottery, which would fall under the same Sector as casino gambling. Adding a large-scale casino to the state would drastically change the spending that occurs within that Industry.  Even though Sector 495 exists, it may not reflect the spending that will happen when the casino opens.

Even when a state has legalized gambling, illegal activities might still occur.  At this point, they are not included in the BEA accounts (Fun Fact: Eurostat already addresses this in their data).  You can read all about it in the article Including Illegal Activity in the U.S. National Economic Accounts by Rachel Soloveichik.  Per the BEA’s Concepts and Methods of the U.S. National Income and Product Accounts, “these activities are excluded from the U.S. accounts because they are by their very nature conducted out of sight of public scrutiny and so data are not available to measure them.”

 

THE HOUSE:

Casinos are owned by different entities.  Corporately-owned casinos will fall under Sector 495 – Gambling industries (except casino hotels).  However, many casinos are owned by Native American tribes and these establishments will actually show up in Sector 526 – Other local government enterprises. 

 

RELATED ARTICLES:

Adding an Industry by Customizing a Region

Adding an Industry that Doesn’t Exist Yet