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Economic impact analysis versus social cost-benefit analysis

the case of a large city running event


Description

For the Dam tot damloop, a running event with 36,757 participants and 115,000 visitors, both an economic impact analysis (IEA) and a social cost benefit analysis (SCBA) are made to study the (broader) economic effects. Three overlapping geographical regions are studied and two new estimates of non-market goods are used. For the hosting cities the net social gain from the SCBA is at least three times the EIA’s economic impact. The larger the geographical area studied, the larger the differences between EIA and SCBA, because the EIA outcome falls and the SCBA outcome increases. A lower multiplier than 1 lowers the EIA much more than it lowers the SCBA. This study shows that an EIA is not suited for evaluating the welfare effects of public support for a sport event. The difference in outcome between EIA and SCBA is substantial. Valuing non-market effects is done infrequently but is crucial for understanding the welfare effects of policies supporting sport events. Organizing an event for social and city marketing benefits can be a better reason than organizing for the direct economic gains.