CIERA™ 2021

CREATIVE BC’S CREATIVE INDUSTRIES ECONOMIC RESULTS ASSESSMENT TOOL

(Updated for 2021 data release in December of 2022)

In 2019, Creative BC engaged Notio Media and Deetken Insight in a collaboration to design a bespoke mechanism of measurement for Creative BC to use annually, leveraging government datasets to track the economic impacts of each of the industries we serve and the creative industries in B.C. overall. Results from CIERA were reported for the first time in the 2019/2020 Impact Report, a second time for the 2020/21 Impact Report, and a third time for the 2021/22 Impact Report. The methodology is described here, including enhancements made for the 2021/22 reports.

The methodology was designed to meet the following criteria: repeatability – the estimates can be updated and regularly and no less than annually; reliability – the data used to generate the estimates are from trusted sources and are well-documented; comparability – the estimates can be compared to those generated for other purposes (different sectors, regions, etc.); comprehensiveness – the data supports estimates that cover the full scope of economic impact (e.g. output, gross domestic product, employment); and alignment – the data supports estimates that align to the particular scope at hand, in this case, the B.C. creative sector.

The approach to build CIERA™ involved 1) establishing industry scope by mapping North American Industry Classification System (NAICS) codes against a standard three-part value chain for each of the industries (creation>production>distribution); 2) assembling publicly available government data required to generate economic impact results for each industry, and 3) designing a tool to calculate Output, Gross Domestic Product (GDP), and Employment each year that is easily updated as government datasets are refreshed and released.

A core component of the methodology is the Provincial and Territorial Culture Indicators (PTCI) and the Culture Satellite Account (CSA) on which the indicators are based. The CSA is a product of both the Canadian Framework for Culture Statistics (CFCS) and the Canadian System of Macroeconomic Accounts (CSMA): the CFCS provides the guiding principles to define and identify cultural economic activity by culture domain and subdomain, while the CSMA provides the mechanism and data to derive the PTCI.

The PTCI include results by culture domain and subdomain* for Output, GDP, and Jobs. Output is the value of those goods or services that are produced within an establishment that become available for use outside that establishment, or in some special cases within the producing establishment, and is net of subsidies** received. GDP represents the output of an industry minus the value of intermediate inputs that were used up in the production of goods and services. Jobs refers to the total number of jobs existing in the industry. If a job exists for only part of the year, it counts as a job for the portion of the year it existed (e.g. 3 months = 1?4 of a job). Conversely, a part-time job is valued the same as a full-time job (both are considered one job). CIERA uses the industry perspective version of the PTCI which represents all economic activity associated with those industries included within the CFCS. GDP is valued in basic prices, which means it includes the taxes an industry pays on expenditures of intermediate inputs used in the production of goods and services. GDP and Output are in nominal terms. Nominal values reflect prices in a given period, as compared to real values which are adjusted for inflation.

Statistics Canada provides a mapping of CSA domains and subdomains to industries based on the 2007 version of the North American Industry Classification (NAICS) system, producing industry codes. This mapping is done at the most detailed 6-digit level. NAICS Canada 2017 Version 2.0 was reviewed by Notio and Deetken with industry stakeholders to select those codes to include in the CIERA model which uses estimates and assigns results to creative industries that Creative BC serves. Concordances between NAICS versions were used to backwards-map 2017 NAICS to 2007 NAICS codes.

Additional data from Statistics Canada’s Business Register (BR) is used to allocate the PTCI to in-scope 6-digit NAICS and thus to the Creative BC industries. Business Register (BR) reports the number of businesses that have employees within a certain range (e.g. 1-4, 5-9, 10-19, etc.) by 6-digit NAICS industry. The midpoint of each range is multiplied by the number of businesses with that range of employees. These are then summed across all ranges to estimate total employment by NAICS code. (Note that the PTCI results reflect the jurisdiction where business activity occurs whereas BR data reflect the jurisdiction in which a business is registered. The BR data, therefore, is used in CIERA as a proxy for where business activity occurred.)

This BR data, combined with output by industry from the Supply and Use Tables (SUT), is used to estimate output per 6-digit NAICS codes, as follows. The SUT include a wide range of variables by Input-Output Industry Classification (IOIC) code, including Output. IOIC is a special aggregation of NAICS codes. Based on this mapping, it can be estimated what the Output was for a given year for the group of 6-digit NAICS code that corresponds to a given IOIC code. Estimated employment results at the 6-digit level from the Business Register are mapped to the corresponding IOIC code from the Supply and Use Tables. These two datasets are used in combination to estimate an output per employee benchmark per in-scope IOIC code. These benchmarks are, in turn, used to estimate output per 6-digit NAICS code, and these results are used to apportion PTCI results to a given Creative BC industry.

The PTCI represent the direct economic impact of the culture industries. Direct impact reflects the immediate economic activity of those businesses within the culture industries. Input-output multipliers are used to estimate the indirect and induced impacts. The indirect impact reflects the demand from culture industries for inputs from other industries. The indirect impact is cumulative, meaning it includes transactions going all the way back to the beginning of the supply chain. The induced impact reflects the economic activity that arises as a result of industry workers, involved in either direct or indirect activity, spending part of their wages and salaries on other goods and services.

CIERA™ utilizes multipliers published by Statistics Canada to estimate indirect and induced impacts. Adjustments are made to these multipliers as follows.

Indirect multipliers | These multipliers are adjusted downward to account for “own indirect” activity, that is, supplier activity from the same industry. Not adjusting for “own indirect” activity leads to a form of double-counting between direct, indirect and induced effects. The multipliers are adjusted downward to reflect only that proportion of “own direct” activity that is satisfied by domestic (BC) suppliers. To determine this proportion, CIERA uses results from the Domestic Use Tables (DUT) that are derived from the Supply and Use Tables.

Induced multipliers | Induced multipliers are similarly adjusted downward to account for “own indirect” activity. While the indirect multipliers are adjusted on total supplier purchases from the same industry, the induced multipliers are adjusted based on that portion of own-industry purchases that goes to wages and salaries. The DUT are used to determine the proportion of output that is made up of wages and salaries for each supplier industry. The induced multipliers are adjusted downward to account for that proportion of total wages and salaries (including both direct wages and salaries and wages and salaries paid by suppliers) resulting from “own indirect” activity, excluding wages and salaries on imports from that industry.

CIERA™ generates two sets of indirect and induced results: one for within B.C. and the other for all of Canada. The adjustments to the within-B.C. multipliers account for both international and interprovincial imports, while the adjustments to the all-of-Canada multipliers account for international imports only. CIERA results published in the 2021/22 Impact Report are based on the within-B.C. multipliers.

The CFCS is mapped to the 2007 version of NAICS, while a more recent version of NAICS is from 2017. 2017 results from the SUT, DUT, and BR are used in CIERA to apportion the PTCI and adjust the multipliers. The same output-to-employment benchmarks are used for all years in CIERA, and, likewise, the proportions used to adjust the multipliers are the same for all years.

To produce estimates for 2020 (published in Creative BC’s FY20/21 Impact Report),. CIERA™utilized historical datasets for GDP and Employment, by industry, in combination with PTCI historical trends. Additionally, for the motion picture industry, CIERA™ also used Creative BC Tax Credit Administration Data, which captures tax credit application data on total production spending in B.C. for all productions with Principal Photography / Key Animation (PPKA) start dates in 2021 (similar to Motion Picture Output, but excludes production activity that does not qualify for B.C.’s motion picture tax credit programs). Finally, the Statistics Canada report entitled ‘Financial impacts of the pandemic on the culture, arts, entertainment and recreation industries in 2020’ (Catalogue no. 45-28-0001) was used to inform 2020 estimates for the books industry and for jobs. As a validation exercise, the relationship between relevant NAICS industries and their respective cultural sectors were checked for statistical significance. For quality assurance purposes, different statistical model approaches were back-tested and scored on their ability to forecast actual PTCI results for 2018 and then 2019, with the best model being selected to generate the 2020 estimates.

Validating 2020 Estimates Against Actuals; Making Estimates for 2021

The most recent version of the PTCI, released on June 2, 2022, includes results for 2010 through 2020. An analysis was undertaken to compare CIERA™ estimates for 2020 to the published 2020 PTCI results (actuals). It was found that the estimated total direct GDP across industries was 9% less in CIERA™ than the corresponding actual PTCI-based result, thereby showing CIERA™ estimates to be conservative. Similarly, last year’s estimates for 2019 were 5% lower than were estimated. With respect to 2020 figures, the major driver for actuals being higher than CIERA™’s estimates is that the PTCI for 2018 and 2019 were restated as higher than in previous releases.

For the FY 21/22 Impact Report, CIERA™ estimates for 2020 are presented as statisticians’ best-effort due to data limitations owing to the unpredictable nature of global pandemic impacts and disruptions on industry activities. The methodology has been enhanced for statisticians’ best-effort 2020 estimates to consider additional supplementary data where possible and relevant. It is anticipated that due to the anomalous nature of pandemic impacts, 2020 CIERA™ estimates (and Statistics Canada’s published PTCI data for 2020, when released) will vary more considerably than CIERA’s 2019 estimates as compared to 2019 actuals.

• NAICS and IOIC code mapping Updated 2021
  • Because CIERA™  was updated this year to use the latest available information, the IOIC-NAICS mapping was also updated from the previous version which mapped IOIC codes to NAICS 2012 codes, to the latest available version which maps IOIC codes to NAICS 2017 codes. Relevant changes to the NAICS structure are as follows:
    • Two (2) codes in NAICS 2012 were consolidated in NAICS 2017 into a single (1) code in NAICS 2017:
      • New code 512250 Record production and distribution (contains two former codes, 512210 Record Production AND,512220 Integrated Record Production/Distribution.
      • This change is noted (item #3) in the CFCS TO NAICS tab (Canadian Framework for Culture Statistics to North American Industry Classification System tab).
    • Three (3) codes in NAICS 2012 were re-coded in NAICS 2017.
      • Note 4: 517112 in NAICS 2012 (Cable and Other Program Distribution) was eliminated and recoded (mapped) to 517310 in NAICS 2017 [Wired and wireless telecommunications carriers (except satellite)]
      • Note 5: 532230 in NAICS 2012 (Video Tape and Disc Rental) was eliminated and recoded (mapped) to 532280 in NAICS 2017 (All other consumer goods rental)
      • Note 6: 711410 in NAICS 2012 (Agents and Managers for Artists, Athletes, Entertainers and Other Public Figures) was eliminated and recoded (mapped) to 711411 in NAICS 2017 (Agents and managers for artists, entertainers and other public figures)

ENHANCEMENTS FOR 2021/22

Separate from incorporating the latest available datasets from Statistics Canada, two enhancements were made to CIERA™ for 2021/22.

The first enhancement was to develop a new set of multipliers that remove double-counting between industries so that economic activity across industries – including direct, indirect, and induced effects – can be summed. Inter-industry linkages occur when one creative industry purchases from another. For example, the motion picture industry’s purchases of goods and services from the music industry are indirect impacts attributable to the motion picture industry and direct impacts for the music industry. To create these multipliers, such inter-industry purchases are ignored, and thus can be used to generate estimates of the total impact of the creative industries that remove double-counting that would otherwise occur.

The second enhancement was to incorporate a new dataset published by Statistics Canada for estimating results for 2021. The dataset, Table: 36-10-0652-01, includes quarterly PTCI at the national level. The latest quarter available at the time of preparing the 2021 estimates was Q1 of 2022. This dataset was found to improve the predictive power of the model for some industries.

LIMITATIONS AND KEY CONSIDERATIONS

The following are limitations and/or key considerations with respect to the methodology:

1. Information from Statistics Canada’s Business Register (BR) was used to derive estimates of employment for in-scope 6-digit NAICS codes. Per above, Business Register data is used to adjust PTCI and multipliers to produce results that align to the required industry scope by estimating employment based on business counts, which presumes that the midpoint of each employment range represents the average number of employees for all businesses within that group.
2. Direct, indirect and induced effects should not be summed across Creative BC industries to attempt to represent total effects, because of likely double-counting across industries. For instance, some direct activity in Music and Sound Recording could be indirect (supplier) activity to Motion Picture.
3. It is questionable to consider spending decisions as induced effects attributable to direct activity.
4. A variety of Statistics Canada datasets are used in the methodology, the release schedules of which vary. Every attempt has been made to match the datasets by reported year.
5. Results should not be viewed as time series. Statistics Canada periodically refines its measurement methods and does not consistently revise published data about prior years.
6. A limitation in applying the multipliers is with respect to how well the IOIC codes align to the in-scope NAICS codes and culture subdomains. The better the alignment, the more dependable are the results generated by the multipliers. This alignment varies across the Creative BC industries.
7. Jobs as a measure is not ideal for gig work as it provides limited insight into the number of individuals working in an industry. “Jobs” reflects the average number of full- and part-time jobs in an industry over the course of the measurement period.
8. The method in CIERA™  to estimate, or “predict”, the prior year’s results is based in part on historical trends. Because the economic disruption caused by the pandemic is without recent precedent, additional supplementary data was used for producing the following 2020 statisticians’ estimates. (The remainder of the estimates for 2020 are based on the statisticians’ estimation method employed for 2019 estimates)

• • Creative BC Tax Credit Administration Data, which captures tax credit application data on total production spending in B.C. for all productions with Principal Photography / Key Animation (PPKA) start dates in 2020 (similar to Motion Picture Output, but excludes production activity that does not qualify for B.C.’s motion picture tax credit programs)
  • Statistics Canada, ‘Financial impacts of the pandemic on the culture, arts, entertainment and recreation industries in 2020’ (Catalogue no. 45-28-0001) (Books, Jobs)

9. CIERA™  was updated in 2021 to deliver 2020 insights using the most recently available data, including: 2019 results from the PTCI, 2017 IOIC multipliers, the 2017 Business Register, and NAICS version 2017 industry coding, (whereas last year’s results were based on 2016 results from the BR and IOIC multipliers, and on NAICS version 2012). The Supply and Use Tables (SUT) use the 2016 benchmark year as before and, because of recent availability, the DUT has now been moved forward to 2016 to sync with the SUT. CIERA™  now uses 2016 BR for 2010 to 2016 data and 2017 BR for 2017+ data to match NAICS concordances. Since 2017 multipliers are the most recent available, they are used to estimate indirect and induced impacts for 2017, 2018 and 2019. Some multipliers changed significantly from 2016, which impacted estimates for some industries. Incorporating the 2017 BR data to represent the 2017-and-later economy structure also had material impacts. Notably, NAICS codes assigned to the IDM industry overall experienced an increase in relevant business counts, which increased the estimated economic activity of this industry from 2017 to 2019. Additionally, Statistics Canada retroactively adjusted PTCI results from 2017 and 2018 which CIERA™  incorporates but creates some drift from previous results.

*Statistics Canada definitions: The domains and sub-domains are intended to be measurable, distinct and recognizable to data users. At their highest level, domains consist of an aggregation of activities, artistic disciplines, industries, products and occupations that are related and provide a useful level of analysis. In most cases, these higher-level domains may be comparable at the international level, while a subdomain may support analysis at a more discrete or detailed level. Core culture sub-domains produce goods and services that are the result of creative artistic activity and whose main purpose is the transmission of an intellectual or cultural concept. Read more online: https://www150. statcan.gc.ca/n1/pub/87-542-x/2011002/s02-eng.htm

**The value of output is reported at basic prices, which means it includes all costs of production incurred by the producer: goods and services purchased as intermediate inputs; wages, salaries and benefits paid to workers; mixed income (payments to unincorporated business owners for their services) any operating surplus (profit or loss); and net payments to government (taxes net of subsidies on factors of production such as labour). Subsidies are netted out because they reduce the cost of certain inputs such as labour, while taxes on factors of production (e.g., property taxes) are added in because they are costs paid by the producer and are included in the final value of the product.

DISCLAIMER

“The views, opinions, conclusions and/or recommendations expressed in these materials are those of the author(s).  These materials do not necessarily reflect the official policy or position of the Government of British Columbia.  The Government of British Columbia does not endorse, nor has it confirmed the validity of the information contained in, these materials.”