Economic Impact Analysis versus Cost Benefit Analysis
The purpose of this paper is to analyze Economic Impact Analysis (EIA) and Cost Benefit Analysis (CBA) for a sporting event of medium size. EIA presents basic information on gross money streams while CBA provides a reasonable overview that is more precise on the exact profits and benefits. It is because of this reason that sports economists have a preference of CBA over EIA. The major purpose that led to use of medium sized event in medium-sized city was reduction of the likelihood of occurrence of over-estimations while carrying out application of EIA. Both techniques had their challenges though initially, use of EIA appeared simpler. This is due to the fact the technique applies primary data which is collected with great ease and can be uses input output models already in existence. Nonetheless, assumptions of the models rarely get disclosed.
Despite the fact CBA is a much favored alternative, undertaking complete CBA is extremely difficult due to the quantity of information it requires. For this reason, simple net profits computation was presented with the information available. A couple of assumptions regarding opportunity costs were also made. The paper also elaborates on numerous benefits and expenses that were not taken into consideration since the figures on the components are not found easily. The question on whether the exceptions counteract themselves of not even answered. However, benefits and expenditures were acknowledged clearly in CBA. Ultimately, what is important is not definite numbers computed through both techniques but rather the comparative difference between the end results. Although both techniques had their fair share of challenges, CBA is advantageous as it recognizes net benefits that are connected to hosting of sport events.