A new commentary piece in the journal Economic Development Quarterly recounts how a decade of research from The Pew Charitable Trusts has spurred and supported states to conduct regular evaluations of their economic development incentives. In 2012, Pew found “that no state regularly and rigorously evaluated the effectiveness of incentives.” Today, the majority do so, “using rigorous and creative methods to measure impact.”
Here are some of the ways that state-level evaluation methods and findings are changing incentive practices, according to the authors:
- No longer a rote assumption that an incentive is responsible for 100% of associated outcomes
- More insight into the actual (not projected) fiscal impact of incentives
- Greater emphasis on defining a clear statement of purpose for the incentive, including intended outcomes
- Highlighting the importance of data collection and data sharing for evaluation and reporting purposes
- Improving methods for communicating findings to decision makers so that evaluations inform future policies
Pew is winding down its own work on this topic, but we believe states will continue to conduct incentive evaluations because, as the article concludes, “Ongoing analysis and reconsideration of incentive programs yield stronger programs and stronger results.”
For more information, please see: States Take the Lead in Evaluating and Improving Tax Incentives (restricted access).
Pearson, C., Wakefield, A., Timmerhoff, L., Gray, E., & Chapman, J. (2025). States Take the Lead in Evaluating and Improving Tax Incentives. Economic Development Quarterly, 0(0). https://doi.org/10.1177/08912424251378378
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