Friday, November 29, 2013

Zero Sum Shopping

The Missoulian today is running an editorial exhorting all of us, as we plunge into the annual orgy of Christmas shopping, to remember to buy local. The idea here – and it’s nothing new and certainly not unique to the Missoulian – is that if we all shop locally, we will “keep money in the community” and help local businesses create more jobs.

Well maybe, but there’s more to it than that.

Here’s the problem: if you’ve ever wandered up and down the rows in the Mall parking lot, you’ve probably noticed that a fair share of the cars are not from Missoula county. Missoula, after all, is a regional trade center which brings in lots of shoppers from surrounding communities, counties, states (Idaho) and even countries (Canada).  And spending by those folks helps keep the lights on and people working in lots of Missoula businesses.  If fact, if you compare the earnings of local retail trade workers to the total income of all local local residents, you’ll find that retail trade earnings are substantially greater in Missoula County than they are in the counties around us. In other words, Missoula’s retail trade sector is somewhat outsized, and the reason is that it serves not just Missoulians, but other folks as well.

The Missoulian wants its readers to buy local, because that’s going to give the local economy a boost. But sauce for the goose is sauce for the gander. If buying local is good for Missoula, isn’t it good for Hamilton and Ronan and Polson and Deer Lodge and Superior too? If the folks in those towns read the Missoulian editorial and take it to heart, won’t they decide to keep their dollars at home and not shop in Missoula?

The problem here is that shopping locally will benefit Missoula businesses only if we here in Missoula are ones doing it, while everybody else continues to schlep their way into town from outlying areas and shop along with us.  It may work, but it seems to be recommending that we beggar our neighbors across the county line.

This kind of thinking frequently crops up in other contexts, as when we are told that some event that’s on tap for Missoula -  a convention or a football game or a track meet – is going to bring in visitors who will spend a bunch of money.  We count all that spending as a benefit for us or even for the state, forgetting that it means that somewhere around here – maybe Hamilton or Ronan or Polson or Deer Lodge or Superior – somebody is off having a fine time in Missoula and not spending their money at home. For the state as a whole, that amounts to a zero sum game. 


  1. Thanks for the perspective, Dick. I wanted to take another look at the Missoula Marathon after reading your post. It looks like one exception, with more than double the total spending from "out-of-state/country" participants compared with in-state ones:
    - Keila Szpaller

  2. You're right. Whatever the geographic area you are concerned with (city, county, state, region, of what have you), if you want to figure out the impact of an event occurring within the area (like the marathon), you should only count the additional spending that's going to occur within the area as a result of the event. That usually means you only count the spending that comes from outside the area. So in principle you can assess the impact of the marathon on Montana using the "out of state/country" participant spending as a starting point (although I will note that there are still a lot of methodological caveats that you should observe, and which are regularly ignored, to get to the right number result from that starting point). What often happens, unfortunately, is that the impact on a particular local area is estimated, and that impact is taken (either explicitly or tacitly) to be the impact on a larger surrounding area. For example, impacts on Missoula county are taken to also be the impact on the state. Of course it works both ways; using "out of state/country" spending may tell you the impact on Montana, but it understates the impact on Missoula because it doesn't include "out of county" spending.