Direct Institution Change from Household Spending

How does one calculated the amount of the Direct Institution Change from a change in household spending? I understand that the direct institution change is the "first round" of the induced effect, but my results seem to suggest some other leakage. In the "Setup Activities" panel the Event parameters for this Activity as as follows: Level:0.1, Sector: 10009 Households 150k+, Household Income Change: 719,157,755.00, Local Purchase Percentage: 15.00%. [table] [tr] [td]Impact Type[/td] [td]Employment[/td] [td]Labor Income[/td] [td]Value Added[/td] [td]Output[/td] [/tr] [tr] [td]Direct Effect[/td] [td]0.0[/td] [td]$0[/td] [td]$0[/td] [td]$0[/td] [/tr] [tr] [td]Indirect Effect[/td] [td]0.0[/td] [td]$0[/td] [td]$0[/td] [td]$0[/td] [/tr] [tr] [td]Induced Effect[/td] [td]56.3[/td] [td]$1,821,036[/td] [td]$3,354,802[/td] [td]$6,250,144[/td] [/tr] [tr] [td]Total Effect[/td] [td]56.3[/td] [td]$1,821,036[/td] [td]$3,354,802[/td] [td]$6,250,144[/td] [/tr] [/table] Direct Institution Change: $71,915,777 Isn't the direct institution change supposed to be the "first round" of induced spending? If that is the case, wouldn't it be 719,157,755.00*0.10*0.15=$10,787,366.325? Why isn't it?
Was this post helpful?
0 out of 0 found this helpful

Comments

1 comment

  • The Direct Institution Change simply displays the original expenditure amount (Household Income Change value * Activity Level). 0.1* 719,157,755 is 71,915,775 (the last digit is off due to rounding). This is merely there to show you what the original spending amount was, since there really is no “direct” effect of household spending and it does not show up in the Direct Effect row in the results screen. Is there a reason you are trying to limit your value with the Activity Level and LPP? The software already accounts for where the household purchases take place (via the Regional Purchase Coefficients). With a Household Income Change, LPP and Activity Level do the same thing (i.e., setting Activity Level to 0.5 would have the same effect as setting LPP to 50%). So by setting LPP to 15%, you are saying that only 15% of 71,915,775 gets spent.
    0

Please sign in to leave a comment.