Economic Impact Assessment
POLICY DECISION LAB · LABORATORY 08
Economic Impact
Assessment.
Move beyond headline activity. Establish what would have occurred anyway, what is displaced or imported, what remains additional and how direct effects propagate through economic and regional systems.
THE ADDITIONALITY ACCOUNT
Activity is visible.
Impact is counterfactual.
Economic impact is the change attributable to an intervention relative to a credible baseline—not the total activity observed among participants or in the target area.
Deadweight
Activity that would have occurred without intervention.
Displacement
Gains offset by reduced activity elsewhere.
Leakage
Benefits accruing outside the target economy or group.
Substitution
One worker, firm or activity replaces another.
Multiplier
Indirect and induced effects generated by net direct activity.
THE IMPACT WATERFALL
Start gross.
Finish additional.
Define baseline
Estimate the outcome without intervention.
Remove deadweight
Retain only activity caused by policy.
Deduct offsets
Account for leakage, displacement and substitution.
Add propagation
Apply appropriate indirect and induced effects.
NET IMPACT CALCULATOR
Remove the headline.
Reveal the impact.
Adjust additionality and propagation assumptions. ECONORIA calculates every stage, geographic incidence and the ratio of net impact to gross activity.
IMPACT VERDICTOnly 65% of gross observed activity remains as estimated net total impact after additionality adjustments.
IMPACT-ASSESSMENT STANDARDS
Every adjustment needs
evidence and boundaries.
State geography
Leakage and displacement depend on whether the boundary is local, regional or national.
Match the multiplier
Use sectoral, spatial and temporal multipliers compatible with the net-direct measure.
Avoid double counting
Do not add overlapping output, income, employment and welfare concepts.
Report ranges
Additionality adjustments are uncertain and should be stress-tested transparently.
SCIENTIFIC CHECKPOINT
What is
deadweight?
Which definition is correct?
Deadweight is defined relative to the counterfactual baseline.
Continue to Laboratory 9: Distribution, Equity and Just Transition →
