Calculating Economic Impact
The economic impact estimates in this report were calculated by Bernard L. Weinstein, Ph.D., and Terry L. Clower, Ph.D. Weinstein is adjunct professor of Business Economics and associate director of the Maguire Energy Institute, both at SMU's Cox School of Business. From 1989 to 2009 he served as director of the Center for Economic Development and Research at the University of North Texas.
Clower is the current director of the Center for Economic Development and Research at the University of North Texas. He has served as associate director, project manager, staff researcher and statistical analyst on numerous projects reflecting experience in labor relations, economic and community development, public utility issues, transportation and economic impact analyses.
Explaining the Multiplier Effect
The economic impact estimates provided in this report were calculated based on the IMPLAN economic input/output model developed by the Minnesota IMPLAN Group (MIG, Inc.), a leading provider of economic planning services whose clients include the Federal Reserve and Stanford University.
Input-output models track how spending flows through a regional, state or national economy, thereby creating additional economic impact sometimes referred to as "the multiplier effect." For example, departments within SMU purchase office supplies from local vendors. These vendors, in turn, hire employees, purchase shopping bags, use inventory-counting services and engage other professional service providers such as accountants. The impact totals in this report refer, therefore, to the combination of direct spending plus the multiplier effect. (The total reported for SMU spending on scholarships represents the actual expenditure, since the economic impact of out-of-town student spending is calculated as part of student/visitor spending.)
Importantly, the impacts in this report account for the effects of spending by the University as well as its employees and its vendors spending a portion of their earnings for goods and services in the local economy. That is, each of these impacts is adjusted to account only for purchases from local entities. For example, some specialty lab equipment is available only from out-of-area vendors. These purchases thus have little effect on the local economy, and the value of their impact is adjusted accordingly.
In this section of the report, the terms "economic impact" and "impact" are used interchangeably.
Calculating Fiscal Impact
While recognizing that SMU is a tax-exempt institution, this report includes estimates of the tax revenue generated by SMU spending. University expenditures generate tax revenue for local and state governments in the form of sales and use taxes, property taxes and government revenue from permit fees and licenses. Tax revenue totals also include estimates of the value of consumption taxes from spending by employees of the University and its vendors and suppliers.