Most economic impact reports are built to justify a decision someone already made. Here is how to tell those apart from a study you can actually act on.
An economic impact study can say almost anything its author wants it to say. The same project can produce a modest number or an eye-popping one depending on choices the reader never sees: which multiplier was used, how much local spending was assumed to stay local, and whether the optimistic projection was treated as a starting assumption or tested against the alternatives. None of that shows up in the headline figure.
That matters because most impact studies are commissioned to make a case. A developer wants the subsidy. A nonprofit wants the grant. An agency wants the project approved. The study becomes ammunition, and a number built to persuade is a poor basis for a decision. Here are the questions that tell you which kind you are holding.
Every impact estimate rests on assumptions, and some of those assumptions move the result far more than others. An honest study names them and shows how much the answer changes across the plausible range. A study that reports one number with no sensitivity analysis is telling you what the author hopes, not what is likely.
Impact studies inflate by assuming every dollar spent locally stays local and recirculates. It does not. Some is taxed, some saved, some earned by commuters who take it home, and some spent at businesses whose suppliers sit outside the region. A credible study accounts for that leakage and says how. A study that quietly assumes full local recirculation is producing a bigger number than the economy will deliver.
The people who commission a study usually arrive with a projection they like. The question is whether the analysis treated that projection as a hypothesis to be tested against rival explanations, or simply plugged it in. A project's effect might be genuine new activity, or it might be displacement of existing local business, substitution, or spending that would have happened anyway. A study that never considers those alternatives has assumed its own conclusion.
Impact answers what a project would do to the local economy. It does not answer whether the project should happen or whether it can pay for itself. Those are different questions, and a study that blends them, implying that a large impact means a sound investment, is doing the reader a disservice. A big impact number and a project that cannot cover its own debt can describe the same proposal.
If a study defines what counts as success only after the numbers are in, the bar can quietly move to wherever the result landed. Honest analysis states its criteria up front and reports against them, so the goalposts cannot shift once the answer is in view.
Ask where the inputs came from. A defensible study cites public, checkable data and lets you reproduce the figures. If the key numbers trace back to the client's own estimate or to a model nobody outside the firm can inspect, the study is asking for trust it has not earned.
This is the tell that matters most. A study willing to state where the evidence is thin, and what would need to be measured to resolve it, is a study doing its job. One that projects confidence everywhere is either lucky or hiding something, and you cannot tell which.
A study you can act on tells you what it knows, what it does not, what could be wrong, and what would change the decision. A study built to justify tells you one number and stops. The first is worth commissioning. The second is worth being skeptical of, no matter whose logo is on the cover.
We build the first kind. Project Red Team runs economic impact and feasibility analysis designed to hold up under exactly these questions, for governments, developers, and businesses across the interior West.
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