Methodology and Analysis
Definition of the St. Louis Metropolitan Area
The St. Louis Metropolitan Statistical Area consists of the following Illinois counties: Calhoun, Jersey, Macoupin, Madison, Bond, St. Clair, Clinton and Monroe, and the following Missouri counties: Lincoln, Warren, St. Charles, Franklin, St. Louis, Jefferson and Washington, plus St. Louis City.
Economic Impact Analysis
This study estimates the economic impact of SIUE. Economic impact is not the same as economic activity. For example, if an SIUE student who would be living in the St. Louis Metropolitan Area (perhaps attending another college or university) even if SIUE didn't exist, spends $1,000 this year at area restaurants, there is $1,000 of local economic activity, but no economic impact, since the expenditures would have taken place in the region even if SIUE didn't exist. On the other hand, if the student is only living in the St. Louis Metropolitan Area because of SIUE, this $1,000 expenditure would create economic impact. Identifying those expenditures that occurred in the region because of SIUE is the first step in economic impact analysis. This study uses survey data and other sources to estimate the expenditures that occurred in the region only because of SIUE.
The expenditures (by students, visitors, employees and the University) that can be attributed to SIUE will have a three-part impact.
- In the above example, the student's $1,000 expenditures represents the direct impact on the region.
- The student's expenditures will cause the restaurants to increase their expenditures on food, supplies and utilities. Furthermore, the restaurants' suppliers may need to increase their expenditures. These purchases (to the extent that they occur in the region) represent the indirect impact on the region. Finally, the restaurants and their suppliers will increase their payroll to accommodate the student's purchases.
- As these workers spend this extra income, a third impact - the induced impact - is generated.
The economic impact values described in this study refer to the total impact - the sum of the direct, indirect and induced impacts.
Some of the values in this study are readily available. For example, SIUE accounting data allow us to determine whether an expenditure occurred in the region. Other values must be estimated. Many of the values are estimated using the IMPLAN model. The IMPLAN model is widely-used by state and local governments, consulting firms and non-profit organizations to estimate economic impacts. This model, originally developed by the U.S. Forest Service, uses an extensive data set for the specified region and an elaborate trade flow model of the U.S. economy to estimate the direct, indirect and induced effects.