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By David McAfee
Sept. 16 — A Motion Picture Association of America researcher criticized a University of Southern California study on film tax incentives, saying the paper “has a number of serious flaws, including poor data selection.”
Julia Jenks, MPAA vice president of worldwide research, published an analysis Sept. 14 of the USC study, which was led by Michael Thom, an assistant public policy professor. Thom’s paper, published in June, found that special tax incentives for filmmaking “fail to deliver the long-term economic benefits promised by industry lobbyists and lawmakers.”
Jenks claimed Thom’s paper has “fundamental scientific flaws,” including the use of imprecise data, that undermine its credibility.
“Although the author describes the analysis as focusing on ‘motion picture production,’ the Bureau of Economic Analysis (BEA) data being used to study the effect of film production incentives is aggregated data that includes movie theater and sound recording industry jobs and wages,” Jenks wrote in the analysis.
“A ticket taker at the local cinema or an engineer at a recording studio should not be affected by film production incentives. Their inclusion in the study adds noise that dilutes and biases the results of the model,” Jenks's analysis said.
The MPAA analysis comes three months after Thom’s study was published and a month after it was promoted by USC. The MPAA says the USC paper runs against trends revealed in studies analyzing tax credit programs in other areas, like New York.
In addition to the use of imprecise data, Jenks claimed Thom’s model design “does not reflect reality, and ignores the fact that different size incentive programs may have more or less impact.” Jenks also pointed to “flaws in the paper’s baseline assumptions.”
“Overall, the Thom analysis reflects a lack of understanding of motion picture production and how incentives relate to those productions,” Jenks wrote. “The claims that transferable and refundable tax credits will have different impacts on employment, wages, and other metrics are not clearly explained in the Thom paper and are implausible based on how transferable film credits actually work, undermining the conclusions and interpretations of the results.”
Vans Stevenson, MPAA senior vice president for state government affairs, called the Thom study “false and misleading.”
“It severely tarnishes the reputation of the university as well as the academic credentials of the author, USC assistant professor Michael Thom,” Stevenson wrote in a Sept. 14 statement. “This is academic malpractice, designed to make a provocative statement rather than offer sound policy analysis.”
In response to the MPAA’s claims, Thom stated that his study was published in a peer-reviewed journal after two rounds of “rigorous, double-blind review.”
“That means that several academic researchers who are experts in the field evaluated the data, analysis and methodology, and determined the study to be credible and the analysis valid for publication,” Thom wrote in a statement obtained by Bloomberg BNA. “This study further validates previous work by other academic researchers, think tanks and state government auditors.”
Thom further stated that, through his research, he found that there were some short-term benefits to state film incentives. However, he said, he also found the incentives had “no sustained impact” on wage growth and little effect on jobs and economic growth.
Responding to criticisms of the seemingly delayed timing of the Sept. 14 analysis, Jenks said it is her job to take the time to analyze the underlying data.
“This isn’t us responding to what the headline or the result is. This is us trying to spend the time, acquire the data, examine the methodology, the assumptions, etc., to try to really understand the research,” she told Bloomberg BNA in a Sept. 16 phone interview. “It took us time and I think that reflects that we were being careful.”
Jenks also noted that there are many conflicting studies on this topic, but many are looking at different angles. Some studies do show incentive programs have positive effects on employment, according to the researcher.
Jenks further stated that Thom’s study, while flawed, “finds significant results” for the impact of production incentives.
“The author has stated that it does find statistically significant impacts, and I found that pretty amazing given the fact that he was using incorrect data and a flawed model,” she told Bloomberg BNA. “My guess is the true effects would be even stronger if these flaws were fixed.”
To contact the reporter on this story: David McAfee in Los Angeles at dMcAfee@bna.com
To contact the editor responsible for this story: Meg Shreve at email@example.com
The USC study is at http://src.bna.com/iFK.
Copyright © 2016 The Bureau of National Affairs, Inc. All Rights Reserved.
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