Modeling resident spending behavior during sport events: Do residents contribute to economic impact?

Abstract

The role of residents in the calculation of economic impact remains a point of contention. It is unclear if changes in resident spending caused by an event contribute positively, negatively, or not at all. Building on previous theory, we develop a comprehensive model that explains all 72 possible behaviors of residents based on changes in (a) spending, (b) multiplier, (c) timing of expenditures, and (d) geographic location of spending. Applying the model to Super Bowl 50 indicates that few residents were affected and positive and negative effects were relatively equivalent; thus, their overall impact is negligible. This leaves practitioners the option to engage in the challenging process of gathering data on all four variables on all residents or to revert back to the old model of entirely excluding residents from economic impact. From a theoretical perspective, there is a pressing need to properly conceptualize the time variable in economic impact studies.