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Where’s my hockey rink?

Summary:
Treasury has updated its CBAx cost-benefit analysis tool to bring in some of the measures from its new Living Standards Framework.And I think I can get a proper* hockey rink out of it.Let's walk it through.According to the CBAx tool, being able to express your cultural identity is worth ,563 per year per point of increase on a four-point scale. Canadians living in the Wellington region would enjoy at least a one-point increase in their ability to express their cultural identity if there were a hockey rink here. It's plausible that it could even increase from zero to four. Let's call it only a two-point increase, to err on the side of being conservative here. So that's then about ,000 per Canadian per year. Over a 20 year lifespan of a rink, at a 6% discount rate, that's worth

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Treasury has updated its CBAx cost-benefit analysis tool to bring in some of the measures from its new Living Standards Framework.

And I think I can get a proper* hockey rink out of it.

Let's walk it through.

According to the CBAx tool, being able to express your cultural identity is worth $9,563 per year per point of increase on a four-point scale. Canadians living in the Wellington region would enjoy at least a one-point increase in their ability to express their cultural identity if there were a hockey rink here. It's plausible that it could even increase from zero to four. Let's call it only a two-point increase, to err on the side of being conservative here. So that's then about $19,000 per Canadian per year. Over a 20 year lifespan of a rink, at a 6% discount rate, that's worth $218,000 per Canadian.

Winnipeg's MTS Place cost $134m CAD - let's call it $150 million NZD.

But wait! I've forgotten the deadweight cost of taxes needed to fund the thing. That $150m rink really costs $180m. And projects like these always have cost blow-outs. Let's say $250m all-up to be conservative.

That really isn't a problem that cannot be surmounted by CBAx and the World-Leading Living Standards Framework™.

You see, all season ticket holders, and anyone going to more than three games per year, would also be a member of the Canadian Hockey Club. Being a member of a club, per membership, is worth $2,536 per year in Treasury's new framework. And gaining a friend is worth $592 per friend gained. Everyone who joins Hockey Club would be making at least two friends. So we're already at an additional $3,720 per year - if we conservatively estimate only two new friends. Friends!

And let's say that one Canadian in ten would report a one point reduction in their feelings of loneliness. A one point reduction in loneliness, on a 0-4 scale, is worth $17,633 per year. Since we are being very conservative here and assuming that only one Canadian in ten would experience that reduction in loneliness, that's $1,763 per Canadian on average.

So we've already added another $5,483 in benefits per person per year - in addition to the $19,000 in cultural identity benefits. So $24,500 in annual benefits - capitalised over 20 years, that's $281,000 per Canadian.

If there are at least 890 Canadians in the Wellington area, (let's round up to 900 Canadians - again to err on the side of being very conservative here), then building us a hockey rink totally makes sense. All of my assumptions have been conservative here too. And I've not considered the benefits to others in Wellington. For example:

  • Hockey improves mental health. Every one point change in mental health (on a 100-point scale) is worth $4,608 per year. Really, claiming a point or two increase on this one across a big enough population can justify just about anything. 
  • People could go skating and become more fit. Every one point improvement in physical health (on a 100-point scale) is worth $1,158 per year. 
I wanted to check whether there were enough Canadians in Wellington to justify the programme, but all the circuits at Stats are occupied in calculating our spiritual health - "just coping with that problem right now, and wow, it's a biggy! Be with you in a while." 

Anyway, I think we can easily conclude that Treasury's World-Leading Living Standards Framework™ completely overturns what every other economist in the world has ever concluded on the economics of stadiums. We've just shown it with a series of very conservative assumptions. 

Oh - and the memberships thing also means that the government should pay my membership fees at the Wellington Club if I would otherwise let my membership lapse because of the cost. The benefits outweigh the club fees. 


* Hockey is played on ice with skates. It shouldn't need an 'ice' prefix to distinguish it from that NZ game played on grass with comically tiny sticks.

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