Why are commodity values more than direct output?
I am estimating the economic effects in a particular county of local spending from patrons of a cruise ship. I have input the spending by industry with all 100 percent local purchase percentage but the activity results in a direct output of nearly 20 percent less than the total value of the commodities? In this instance, the total commodity value is $38 million and the resulting direct output is only $31 million. My understanding would lead me to believe that these two figures should be equal.
What are some of the reasons why they are, in fact, shown to be quite unequal? There is retail spending that is defined as such; would the retail element reduce direct output so that it is less than total spending?
Thank you,
W
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IMPLAN SupportHi Your reasoning is correct. Typically in Industry based analysis the Sum of Event Values (the total of the Industry Sales for all included Events in an Activity) is the same as Direct Output, but retail Sectors are one of the large exception to that 'rule'. This occurs because Retail Stores do not produce the products they sell and thus the only known local portion of a Retail Sales value is the portion kept by the store for it's operations. You can see exactly what proportion of the total sales this is in the Event Options> Edit Event Properties>Margins> Edit screen with the Retail Event highlighted. For the purpose of the analysis you want to have this Margined value for the calculations of local impacts, but you can report the full value in Direct Output since that is the full sales value, just not the value that is used to calculate the impacts. This article talks more about Margins when you don't know precisely the items being purchased. http://implan.com/index.php?option=com_content&view=article&id=161. Thanks!0
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