Idaho’s citizens have been hearing a lot lately about the potential positive economic impacts of the F-35 being stationed at Gowen Field. The risk of misinterpreting these numbers is enormous, so it is important to understand what they actually mean and where they come from.
The positive economic benefits widely disseminated are that Gowen Field supports 2,800 direct and indirect jobs and contributes more than $155 million to the local economy. These numbers come from a 2015 IDANG study called the Idaho National Guard Economic Impact Study, and are based on an economic model called IMPLAN, which I have used in my own research.
IMPLAN (for IMpact Analysis for PLANning) is a widely recognized input-output modeling framework designed to estimate the economic impacts of an organization’s expenditures. IMPLAN estimates three types of impacts: direct, indirect and induced. Direct impacts come from an organization’s capital expenditures and operations, such as payroll. Indirect impacts are generated by an organization’s suppliers, who make expenditures on their own payroll, and goods and services. Induced impacts are generated by workers who spend their additional income. Simply put, IMPLAN follows expenditures made by an organization as they ripple through the economy, with indirect impacts coming from additional business-to-business transactions and induced impacts coming from additional household spending.
IMPLAN is good at some things and not so good at other things, and an IMPLAN analysis is informative only if used properly. The relevant policy issue here is the replacement of the A-10 fighter with a long-term flying mission featuring F-35 jets. According to IDANG, the F-35 would allow Gowen Field to sustain, and possibly enhance, its current economic impact.
The problem is that the IMPLAN analysis conducted by IDANG does not take into account negative impacts, even though the F-35 will be much louder than the A-10. The academic literature is rich with evidence of the negative impacts of noise pollution on cognition and health (Novotney, 2011). In fact, an entire academic journal, “Noise and Health,” is devoted solely to the impact of noise on human health. The negative impacts of aircraft noise have also been documented for recreational activities (Krog, Engdahl, & Tambs, 2010) and housing values (Nelson, 2004). Air pollution is another well-documented concern (Caiazzo, et al., 2013), which, along with noise pollution, has been raised in this newspaper by concerned citizens of Boise (Seigart, 2017).
Economists are oftentimes confronted with situations like this where experts offer evidence of potential negative impacts or citizens offer testimony about negative quality-of-life impacts. The response of a well-trained economist, in cases where the potential negative impacts are large, is to quantify in dollar terms a range of negative values, and then apply these values as an offset to the positive impacts.
The economic impacts touted by IDANG contain no such offset and therefore are not meaningful from a benefit-cost perspective. The IDANG estimates should be disregarded when it comes to the F-35; they do not reflect the potential net economic impact to Boise.
Kevin E. Cahill, Ph.D., is a project director and senior economist with ECONorthwest, a public policy and economics consulting firm in Portland. Cahill heads its Boise office, and his views are his own, not those of his employer.