City Council just gave the Rose Festival big discounts on city fees as Portland's "official" festival. To justify that, Randy Leonard's blog claims the Rose Festival generates $50 million a year for the city's economy. Really? —I ♥ Carnies
One great thing about this job is getting to say things like, "I need an economist, stat!" to people who aren't allowed to hang up on me. This week's unlucky winner was Robert Whelan, senior economist at ECONorthwest, who just gave me a crash course in the calculation of such figures.
Here's how it works: First, you figure out how many people are coming into the city who wouldn't come otherwise. You survey, say, 300 of these rubes to see how much they spent, and what they spent it on. Finally, you plug those numbers into an economic model and wait for your answer to pop out. It's just like making toast!
More precisely, it's like making toast would be, if toasters could make anything you wanted—toast, Pop-Tarts, CD-ROMs—depending on how you fiddled with the knobs.
See, the rubes don't actually spend $50M themselves—they spend more like half that. But according to economic models, the waiters and carnies who pocket the rubes' cash will spend some of that money in the city, so those transactions count toward the total. And, of course, the coke dealers and strippers who get that money will spend some of it as well. This process continues until everyone's money is tied up in mortgage-backed securities and Mom's turning tricks at the gas station. Go capitalism!
If this all sounds like the same money is getting counted two or three times; well, that's what I said. "Economies are measured by transactions," Whelan replied. Apparently, it's doesn't matter that it's the same money sloshing around, as long as it sloshes vigorously.