Economic Impact Analytics (EIA)

Isn't it time you evolve from static impact reports with outdated processes to dynamic interactive what-if analytics that applies big data, cloud computing, ensemble modeling, and machine learning?

What is Economic Impact Analytics?

At it’s core, Economic Impact Analytics is the assessment, evaluation, and estimate of the economic effects in dollars that establishing and operating a new project would have on the project site, neighborhood, surrounding neighborhood, city boundaries, trade areas, regions, and online impacts. “Drivers” of economic impact, also known as Key Performance Indicators (KPIs), include dollars generated from spending, wages, revenue, and profit as a result of the construction and operation of the project.

Why Do I Need Economic Impact Analytics?

Traditionally, economic impact studies are conducted to estimate the impact a proposed project would have on the surrounding economy. Traditional economic impact studies apply an input-output (I/O) model to measure (i.e. estimate) the direct, indirect, and induced effects of new economic activity. One prime and vital example of direct effects include new jobs generated into the economy due to specific development activity. Indirect and induced (i.e. multiplier effects) are the additional dollars and jobs generated (i.e. caused) by the direct spending of the initial businesses and residents affected by the new economic activity.

Spring-boarding off traditional economic impact studies, Competitive Analytics developed EIA in order to continue where traditional studies leave off - supplementing traditional studies with new multiple data-centric methodologies that capture new impacts from new economic cycles, new business cycles, and new regional demand dynamics. At its essence, Competitive Analytics' EIA delivers a far more comprehensive series of insights for city decision makers, developers, investors, and residents of a city - with an online interface for anyone to quickly and easily discover various economic impact scenarios. Essentially, deeper, broader, wider answers via innovative dashboard interfaces that empowers all users to immediately stress test any and all assumptions, inputs, or parameters.

Quite a different approach than reading a static PDF . . .

Why Choose Competitive Analytics to conduct Economic Impact Analytics?

Competitive Analytics overhauled the traditional approach (and unfortunately currently and widely used approach) to economic impact studies, and thus created a fully dynamic, parameterized, multi-driver, multi-geospatial, multi-KPI online analytics dashboard . . . comprehensively encapsulating the complex interactions between input drivers and their effects on the project’s regional economy resulting from the establishment of the proposed project. Viewers of the online model will have the ability to change input values on the fly and “visualize the impact” dynamically, empowering users with instant access to near infinite possibilities in scenario building.

The core work flow of Competitive Analytics' EIA (“Economic Impact Analytics”) examines 12 "Economic Impact Inputs" - direct and indirect effects of a change within a specified economic region by estimating the net economic contributions from potential input drivers such as changes in development, households, business revenue, personal income, jobs.

These 12 "Economic Impact Inputs" are driven by a variety Economic Impact Methodologies - which is in stark contrast to the traditional approach of one approach with static data. All Economic Impact Inputs + Economic Impact Methodologies roll-up to an ensemble model (combination of all models, data inputs, etc.).

The Circular Flow of Economics

The circular flow of economics is also a key concept with the EIA framework. There are many such definitions, yet the illustration below synthesizes the concept in which dollars spent leads to incentives to produce (demand-driven) versus dollars invested to produce leads to spending (supply-driven). The debate roils on regarding which is foundational theory is the “origin point” within the flow of economic impact (demand driven spending versus supply side production), yet what matters within an EIA is the perpetual loop or “circular flow of economics” that results in the synergistic increase in both spending and production (or production and spending). In the case of a new development project (e.g. new apartments), the new catalyst of economic flows does originate on the supply side yet quickly results in an increase in new spending via new temporary construction jobs, and more importantly, new (and permanent and near-permanent) residents, employees, employers, jobs, wages, and profits.

SEQOL (Significantly Enhancing Quality Of Life)

Competitive Analytics designed and developed an unparalleled quality of life index and planning tool called DECIPHER™ SEQOL (acronym for Significantly Enhancing Quality Of Life). This dynamic and multi-functional index is unlike any other in terms of accuracy and usefulness. It is both an index and planning tool. Other quality of life indices are typically based on a handful of static indicators at a specific point in time. What SEQOL provides is thousands of indicators categorized within the 8 City SEQOL Dimensions, empowering city decision makers, developers, investors, and residents of a city to visualize how a city evolves both economically and humanistically.

Competitive Analytics’ 22 Building Blocks

Another methodology we applied in developing comprehensive EIA Models is referencing Competitive Analytics’ 22 Building Blocks. The following diagram illustrates Competitive Analytics’ 22 Building Blocks (i.e. analytics functions) for developing a robust data-analytics platform. This comprehensive approach is conducted through examining and accounting for as many interacting elements as possible in order to more holistically estimate economic via the impact in key performance indicators (KPIs) by region and driver.

Example Screenshots of EIA Model

FIA (Fiscal Impact Analytics)

Like EIA (Economic Impact Analytics), it’s close brother (or sister?) is FIA (Fiscal Impact Analytics) . . . the assessment, evaluation, and estimate of the economic effects in dollars that establishing and operating a new project would have on a city government’s financial status - as opposed to EIA which estimates the economic effects of a project site, neighborhood, surrounding neighborhood, city boundaries, trade areas, regions, and online impacts. “Drivers” of FIA , also known as Key Performance Indicators (KPIs), include dollar inflows (e.g. taxes) versus dollar outflows (e.g. additional services required such as fire and police).

Just as EIA is based on an advanced framework of big data, cloud computing, ensemble modeling, and machine learning . . . so is FIA. In other words, analyzing the fiscal impact of a specific project(s) to the city itself demands a far more robust and data driven approach than a simple and static PDF and/or PowerPoint slide deck. Essentially, FIA delivers a much higher level of reliability and insight based on extremely large data sets, dynamic-parameterized inputs, powerful machine learning algorithms, ensemble modeling, interactive what-if dashboards . . . and most importantly, the ever-changing assumptions and inputs that city decision makers must be able to stress test based on everyone’s realization that we all now live in an über-fast changing world in which both global and local data is both paramount and a pre-requisite to good and responsible city planning and execution.