Rejecting “Conventional” Wisdom: Estimating the Economic Impact of National Political Conventions

Abstract

This paper provides an empirical examination of the economic impact of the Democratic and Republican National Conventions on local economies. Our analysis from 1970-2005 of the 50 largest metropolitan areas in the country, including all cities that have hosted one of the national conventions during this time period, finds that the presence of the Republican or the Democratic National Convention has no discernable impact on employment, personal income, or personal income per capita in the cities where the events were held confirming the results of other ex post analyses of mega-events. JEL Classification Codes: O18, R53

Mega-Events: Is Baylor Football to Waco What the Super Bowl is to Houston?

“…Supporting conventional wisdom, however, the analysis shows that the NFL's Super Bowl and the National Basketball Association's (NBA) Allstar game have the largest positive impacts on local sales tax revenue, suggesting that these events have the largest net impact on taxable activity. In support of Baade, Baumann, and Matheson (2009), the results here suggest that hosting a national political convention corresponded with a dramatic net decrease in taxable activity.…”

The economic importance of meetings and conferences: A satellite account approach

“…For example, cities often use mechanisms such as hotel & sales taxes, tax breaks and subsidies to part-fund or encourage the construction of sports stadia and cultural venues, and with very similar arguments (Jones, 2002;Baade 2008). In some cases the benefit to city or region in comparison to the facility itself is clear.…”

“…There has long been a disconnect between policymakers attitudes to the need for visitor facilities, and academic evidence on their longer-term economic impact (Baade, 2008;Boyle, 1997;Coates & Humphreys, 2000). There are a number of reasons for this.…”

“…Secondly, the development process for large infrastructure -whether exhibition hall, conference centre, stadium or other mega project -is subject to political capture by both outside agents and local elites, and may be badly managed or at inappropriate scale if proponents are gripped by city 'boosterism' and then with potential economic impacts overstated (Kidd, 1995;Hall, 2006;Flyvbjerg, 2008). For example, Baade et al (2008) examined 18 national political conventions between 1972 and 2005 and found no correlation between conference hosting and municipal growth, despite a longstanding argument that such signal events were of significant benefit to the host. Convention proponents might argue that benefits arising from such events are in large part intangible, and hence more difficult to measure with traditional economic tools, but without at least a reliable and consistent measure of economic impact for MICE, there may remain the perception that local constituents do not get good economic 'bang for their buck' (Dwyer et al, 2007).…”

“…In order to attract convention traffic, cities will often invest in (or otherwise support) conference and exhibition facilities that are expensive, and hence are an opportunity cost in terms of alternative policy interventions (Baade et al 2008;Boyle 1997). This is particularly relevant because such facilities are in many places economically marginal, and many even require ongoing public subsidy.…”