Commodity change versus household income change

Hi Hulya, A Household Income Change Activity type would be appropriate. We are not familiar with the BLS spending patterns, but would love to see them, if you would not mind pointing them out to us. As regards using their spending patterns the only caution we would provide is the be sure that you are using the correct spending value as Activity Level, as this rent abatement should still be subject to taxes, which the Household Income Change will accommodate, but which may need to be removed from the value for the BLS spending pattern if it has no way to account for this.

Thank you for this reposnse. What I am doing with the spending pattern is similar to what the model itself doing when it is entered as the HH Income change (BLS, Consumer Expenditiure Surveys, Housing Tenure and Type of Area http://www.bls.gov/cex/). My question about your answer is related to the leakage. When I entered the rent assistance amount a substantial amount of it did not show up as "final demand." (when I hit the preview button after entering this amount, I could see the actual final demand amount and how this amount is distributed among the sectors). I am not sure if I am looking at a right place and if so where does the leakage go? The second issue is about the money that goes for rent (again in the same preview I can see that there is a big chunk of money going for shelter cost). This money is for paying their rents (they pay rents, the amount they will not be cost burdened, but it is not part of this money). Isn't the assumption that they will use this amount for spending on goods and services instead of paying their rents? Is there anyway I can nullify that rent amount and it can go for spending in other sectors of the economy? Thanks again for the response.

Hi Hulya, Thank you for the link to the BLS data. You are correct that the full amount is not being spent by the model, there are basically 4 things that are causing you to see a difference between your entered Household Income Change value and the Total value in the Final Demand Preview screen. 1. Household Income Changes will remove income taxes on this value based on the rate of income tax associated to your Household type. Since you are working with low income households these will likely represent a small reduction, if any from the total spending. 2. Household Income Changes will remove savings, also likely a small amount or zero due to the fact that you are using lower income households. 3. Most of what a consumer buys is not produced locally, even if the spending occurs locally. The Household Income Change will spending the money through the spending pattern, based on the ratio of local use to local supply. This results in decreased demand being applied to the multipliers. 4. The final demand preview screen shows the dollar values deflated down to the base data year. So for example, if you are using a 2011 data model, and are using an Event year of 2013, the values displayed in this screen, will reflect the 2011 equivalent of those dollars. In most cases these are not assumptions that you will want to change, and when you run the analysis you can re-inflate your dollar values to reflect the Event Year dollars. The spending patterns in IMPLAN are general spending patterns for residents, and so a significant amount of money will go to Sector 360 for rental and to 361 for repair and maintenance of homes. If you want to assume that your money is spent like the average household, but without these specific payments, you can affect this, by using the Household Spending Pattern, rather than a Household Income Change Activity. You would import the spending pattern in through the Activity Options> Import> Institutional Spending Pattern. This would allow you to remove Events for purchases of 360 and 361 and use the Event Options> Change All> Normalize to reset the spending pattern total to 1.00. Please note that the spending pattern methodology spends all the money in the Activity Level field, so if there are any adjustments for income taxes or savings you would want to make these manually to the number you enter into the Activity Level field. This will also allow you to adjust the LPP's on Sectors that you know are purchased locally. But again you would only make these adjustments on Events that you knew for a certainly that the spending was occurring in the local region.

I did what you suggested. I imported institutional spending pattern and deleted (and also tested by setting them to zero without deleting) the sectors 360 and 361. After that I normalized the event values. I have a problem here: After doing this, the input values in the other unrelated activities (I have several activities for this project) have changed dramatically. For example, the initial input value for oilseed farming industry in activity 1 has changed automatically from $1 million to $1.165. What might be the problem?

Hi Hulya. Even though you removed Sector 360 and Sector 361 (Real estate establishments and imputed rental activity for owner-occupied dwellings) from your household Spending, the spending associated with those sectors is still there and will be redistributed to the remaining sectors in the model. You may remember, when you zeroed out the coefficient values for those two sectors, you had to normalize the spending pattern. What that does is to redistribute those coefficient values among the remaining sectors in the model to keep the spending at 100 percent. In other words, Normalizing is helpful when you need to edit (change or delete some items) a spending pattern but keep the spending for the Event in the same ratio/proportion. So, you should not be surprised when you see some small increases in most of the coefficients in the Household Spending pattern. That is to be expected. We hope this addresses your question.