There are interesting comparisons and contrasts between sports mega-events and today’s presidential inauguration. Obama’s big day is expected to bring about 2 million visitors to D.C. along all of the positives and negatives normally associated with mega-events. Just like during the Super Bowl or the Olympics, hotels, restaurants, and transportation companies are doing big business while the crowds and congestion are likely to severely reduce regular economic activity.
Bryan Engelhardt, Rob Baumann, and I ran the numbers for employment in Washington during inaugural years and came up with the usual answer for mega-events: inaugurations have no statistically significant impact on employment and are as likely to worsen the employment picture as improve it.
The big difference between sports mega-events and the inauguration is the policy prescription. People like us as well as Rob Baade, Phil Porter, Dennis Coates, and Brad Humphreys, among others, deride studies purporting a large economic impact from mega-events in order to limit public subsidies. In the case of the inauguration, however, the opposite conclusion could be reached. Our results could easily be used to justify national subsidization of D.C.’s big party. Washington is not competing with others to host the event. Indeed, the inauguration is thrust upon the city. The inauguration is not being undertaken primarily to enrich private parties but instead is constitutionally mandated. If the event crowds out more economic activity than it generates, there is clear justification for D.C. to request subsidies to host the event.
While the NFL requires large payments from cities for the “privilege” of hosting the Super Bowl, D.C. can rightly request large payments from the rest of the country for the burden of hosting the inauguration. Of course, only one of these subsidy requests is backed up by the numbers.
