Why would the output from a household income event be lower than the input?


I've been working on a project that models household income events in different counties in a state, and noticed something about the output that I am struggling to understand. 

For some of the smaller counties that I have been looking at, I have been assuming about $2-3 million in extra household income as the event.  However, the output (again, for smaller counties) often comes out at less than the input amount, by nearly half in at least one case.  Shouldn't the output of a household spending event include the dollars in the initial input?  Is there something I might be missing?  I can provide additional information on the project/event, if that helps.

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  • Official comment

    Hello Donald! 

    This is an expected occurrence whenever utilizing Household Income Events in IMPLAN. Per our support article - Household Income Events: "Household Income Event values should include all new Household Income the residents will receive including personal tax and savings. IMPLAN will automatically deduct personal tax and savings from the Event value input. The remaining portion is applied to that Household Income group's spending on goods and services. However, not all of the goods/services demanded are available or produced locally. Household spending of income on imported goods and services will be treated as leakage and those purchases will not be counted in the impact results. In most instances, the impact results will be lower than the user input for Event Value."

    So the key takeaways here:

    1) From your inputted Household Income Event Value, IMPLAN automatically will remove personal taxes and savings.

    2) Whatever value is left after removal of personal taxes and savings will be spent by the households on goods and services. However, only the spending on locally available or locally produced goods and services will produce a local impact. Logically, the smaller the region, the more likely that these goods and services will have to be imported to meet the local demand - all of those dollars will not produce any local effects (and thus will not show up in the Output Results). 

    Hope this helps!

    Michael Nealy

  • It does, this makes sense.  Thank you!


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